In France, sales tax (called VAT in the UK or sales tax in the USA) is called TVA, which means Tax on Value Added (or in the original French: Taxesur la ValeurAjout e). It is set to 19.6 % (relevant to most items and services) or 5.5 % (relevant to some items and services).
TVA (VAT) on French Property Renovations & Extensions
If you are buying a property in France, you must take into consideration that materials and labour expenses for renovations or minor extensions is taxed at 5.5 % rather of 19.6 % provided that the following 3 conditions are fulfilled:
Your home is at least 2 years old. If you house is simply under 2 years of ages, you may wish to wait a few months until it crosses the 2 year limit, decreasing your tax rate from 19.6 % to 5.5 %.
The remodellings are small to medium in size. If your home needs significant remodellings, it may deserve staging this into separate smaller renovations with time, in order to gain from the decreased tax rate. Specific jobs performed within a 2 year duration can be thought about as a single item, so major products may have to be staged to take place more than 2 years apart to prevent the 'major renovation' limit.
The work is done by a registered trades individual. It is recommended to have the individual doing the work offer a composed price quote (understood in French as a 'devis'), which need to reveal their TVA registration number. This way you have actually a composed document beforehand showing that they can and will charge the work at 5.5 %.For property in france click on france property magazine.
Note that the reduced rate of 5.5 % is only suitable if all 3 conditions are fulfilled. If, for instance, you buy the products yourself rather of having the tradesman purchase them, you will end up paying 19.6 %. Obviously, you can still pick up and pay for the materials yourself (for example, if you don't desire a workman to leave the job simply to get some more materials) however make sure that it is acquired under the tradesman's account so that you can benefit from the lower tax rate.
Particular additions (such as a pool or a tennis court) are considered 'high-end products' and are specifically left out from the reduced rate. If you are unsure if the prepared work certifies or not, ensure that the tradespeople doing the work provide a composed estimate revealing the reduced rate (as described above) or confirm with your regional tax office.
As an example of the value of the lowered tax rate, I just recently had a plumber charge me 20 euros to install a 200 euro radiator. If I had bought the radiators and installed them myself it would have cost 239.2 euros (200 euros at 19.6 % tax) whereas having a professional plumber do the work it was only 232.1 euros (220 euros at 5.5 %). It was cheaper to have a professional do the work than to do it myself!
When the work is completed, the tradesperson should offer you a file accrediting that the work was done at the reduced rate of 5.5 %. All such documents should be saved until the end of the 5th year following completion of the work, as you are legally required to supply such documents need to the French tax office request it. In practice, this is very rare, however it deserves submitting the documentation simply in case.
Although a composed quote from an expert tradesman quoting 5.5 % suggests that he can just charge you this amount, if the tax office should examine (unlikely, but possible) and choose that 19.6 % is due, it is you rather than the tradesman that will be responsible for paying the additional tax to the tax office. Naturally, you can attempt recovering the added expenses from the tradesman that exaggerated however success in this action would depend on the certain circumstances.
TVA (VAT) on French Property Sales & Purchases
If you buy a new construct property (i.e. under 5 years old) or a property which has actually had a total remodelling (e.g. it was uninhabitable prior to the renovation) then the sale of the property is liable to taxes at 19.6 %. Consequently, before making an offer on a property or signing any agreement, you ought to either be prepared to pay these taxes or make sure that they are not appropriate (either by having a notaire verify it, or having a provision in the contract where the seller agrees to accept any such expenses ought to they apply). If you are purchasing a property which is nearly 5 years old, it might deserve delaying the purchase of the property up until you cross the 5-year threshold, therefore eliminating the have to pay TVA taxes.
If you are selling a property which is subject to TVA at 19.6 %, be aware that notified purchasers will factor this expense into the rate settlements. If you have a property which is close to the 5-year limit, it might be worth postponing the sale till this tax is no longer appropriate, so that you can secure a better price.
BARREL (TVA) Reimbursement & Reclaiming
You might have the ability to reclaim TVA (rembursement France VAT) if:
You have actually purchased items which you take outdoors France, or
You have a company which is signed up in both France and another nation.
If you choose to recover TVA, you need to be aware that you will then probably be liable for sales tax (VAT) in your location country. For instance:
If you buy products in France which you take out of the nation to the USA, although you may reclaim the French tax you may then be liable to the USA equivalent sales tax.
If you have a company which is registered abroad and buy products or services in France, while you may recover French TVA you might then be liable to VAT (sales tax) in your nation of registration.
Consequently, recovering TVA might not be a worthwhile procedure, if you then have to pay it in another country. The main advantage of this is if the tax rate in France is higher than the other country (in which case you get from paying a lower rate of tax) and the amount of tax involved is sufficient to justify the effort and documents of making a claim.
Applications for a refund need the initial paid billing. Due to efforts to defraud the French tax office by several claims on one VAT item (i.e. attempting to have the taxes reimbursed 2 or more times), the tax office insists on initial files instead of copies.
There are a number of specialist companies that will do the paperwork and reclaim VAT for you (if you do a Google search on appropriate terms). If you get in touch with the French tax office, they can provide the appropriate kind so that you can recover yourself. Better yet, contact your local tax office and demand a copy of the brand-new European kind (in English) for VAT refunds.