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Claiming back VAT on a French property purchase

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If you are thinking of buying a French property, be that a hotel, chalet or even an apartment, your French estate agent might have tempted you with the fact that it might be possible to reclaim VAT (TVA in France) from the purchase cost. With TVA at 20% that can be a sizable reduction on the purchase cost and a very tempting idea. When our customers express an interest in this we tend to refer them to the accountants we work with, SAREG in Les Gets. The reason we do this it because for a purchaser from outside of France it can be a difficult process. SAREG have provided us with a help sheet on the subject, which I have summarised here.

off plan chalet in France

TVA is levied on French property in the following cases.

 

  1. If the property is being built new (off-plan) by a developer.
  2. If the property is less than 5 years old AND you are purchasing the property from an individual who is subject to TVA

So if TVA is paid on the purchase of the property you may then be able to claim it back but only if you prove the property will be used as a Hotel type business. Self-catering businesses do not count. Of the following 4 services, the new business must provide 3, they should be included in the price and not offered as an “option”.

  1. A guest reception, on site or nearby.
  2. Breakfast
  3. Provision of and cleaning of linen
  4. Room cleaning at least 3 times a week

If you or your business do not provide these services directly then they can be contracted out. This provision will have to continue for 20 years otherwise a proportion of the TVA will need to be repaid. As an example, if you sold after 10 years you would have to repay 50% of the TVA.

So it is likely a purchaser using this scheme will either be an established business in France already providing hotel type services (para-hôtellerie), or will sign a contract with an established business (so a ski company that provides catered holidays).

If you would like to discuss this further we would be happy to introduce you to our English speaking contacts at SAREG for an initial consultation at their offices in Les Gets or St Pierre en Faucigny.