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Real estate VAT reform
The amending finance law for 2010 operating real estate VAT reform came into effect on March 11, 2010 and substantially amends the tax rules of real estate sales.
One of the major novelties concerning the person liable the VAT which will now always vendor, knowing that only a seller "subject" VAT will be considered as liable.
The definition of the "subject seller" is not yet clearly defined.
It would seem that this concerns any person exercising independent professional activity in its economic activity.
To the contrary, a "overage" is one that achieves real estate operations outside of an economic activity.
Another novelty is the sale of land to build plan.
Formerly, the commitment to construct, expressing the intention of the purchaser, could be characterized as "land building" and do come within the scope of VAT.
Now, the concept of land to build depends solely on its buildability to rules of Urbanism (P.L.U.)
From the initial comments, a few practical cases can be analyzed:
Sales within 5 years of its completion a although an individual has built or constructed:
This sale now escapes VAT because the seller is by definition "overage". This means in practice that the seller will not VAT residual to be remitted to Treasury on its added value. However the purchaser will solve "ordinary" costs of around 6.5% (including 5.09% state).
Sales within 5 years of its completion of real property by a professional (goods merchant or sponsor):
All assignments in the 5 year period within the VAT on the vendor side. The purchaser shall bear charges "reduced" (2.5%).
Sales within 5 years of its completion a although an individual has acquired in the future state of completion (purchase plans):
By way of exception this sale is VAT (as previously). Vendor will be liable for the VAT (total price) and the purchaser to benefit from the "discounted" fee approximately 2.5%.
Sale of building by a private individual to another private individual:
This sale escapes as VAT once but for the new reason that vendor is not considered a "subject". The seller is not liable for VAT and the buyer assume "ordinary" fee of around 6.5%.
Sale of building by a professional for an individual:
This sale now comes within the scope of VAT.
Thus the seller will be liable for VAT:
-on the total price (if field gave rise to deduction of acquisition).
-or on the gross margin (if field had not opened right to deduction of acquisition).
The purchaser shall pay charges "ordinary" (6.5%) in the case of VAT on margin, and charges "reduced" (2.5%) in the case of VAT on total price.
BOAN REAL ESTATE
www.chalets-stgervais.comTél. : +33 (0)4.50.91.09.97 transactions@agenceboan.com Legal Mentions - Sitemap