Real estate VAT in France: its implications for buying or selling

For many international buyers, Value Added Tax (TVA) is one of the less familiar aspects of purchasing property in France — and it plays a particularly important role in the Alps, where new-build ski apartments, managed residences and leaseback investments are widespread. Whether you are considering an apartment in Val Thorens or Alpe d’Huez, or a resale near Grenoble, the way VAT applies — or does not apply — to a transaction can meaningfully change what a buyer pays, or what a seller ultimately receives. For the wider tax picture surrounding a purchase, see our overview of taxation in France, and our guide to buying property in France for the process itself.

French real estate VAT does not work quite like Stamp Duty Land Tax in the UK, or comparable transfer taxes elsewhere. Rather than a single flat rule, it depends on three factors that interact with one another:

• the seller’s VAT status — are they acting as a business (a developer, a property trading company), or as a private individual?
• the age of the property — has it been completed for less than five years?
• in some situations, an option to apply VAT voluntarily, even where it would not otherwise be due.

This guide sets out how these rules tend to apply in practice, with examples drawn from the kind of transactions commonly seen in the Alpine property market.

The three pillars of French real estate VAT

A property is generally treated as “new” for VAT purposes if it was completed less than five years ago, based on the official completion declaration (the déclaration d’achèvement des travaux), regardless of how many times it may have changed hands since.

The seller’s status is the second — and arguably the more decisive — factor. A sale by a VAT-registered seller of a property completed within the last five years is, in principle, subject to VAT. This category includes developers selling off-plan, property trading companies, and, importantly for the Alps, private individuals who have recovered VAT through a leaseback arrangement (see Section 3). A sale by a private individual acting outside any business activity generally falls outside the scope of VAT altogether, even where the property itself is “new”.

Finally, in a limited number of cases, a VAT-registered seller may choose to apply VAT to a sale that would otherwise be exempt — for instance, a property older than five years. This option for VAT is less common in residential transactions, but can be relevant for commercial premises or building land.

Buying off-plan (VEFA) in a ski resort: the standard case

Example: an investor buys a new two-bedroom apartment directly from a developer in Val Thorens under a “vente en l’état futur d’achèvement” (VEFA) — a purchase agreed before the building is finished. The apartment was delivered two years ago, and the developer is VAT-registered.

➡ The 20% VAT rate applies to the total sale price, and it is generally included in the price quoted by the developer, rather than added on top at completion.

➡ In return, a reduced registration duty of 0.715% applies, rather than the standard rate of around 5.8% to 6.3% payable on most existing properties (see our guide to taxation in France for how these transfer taxes work on a résale purchase).

This combination — VAT included in the price, but a considerably lower registration duty — is one of the main financial differences between buying a new-build and buying an existing chalet in the Alps. We go through the wider VEFA process, from reservation contract to delivery, in our dedicated guide to buying off-plan property in France.

It is also worth noting that VEFA purchases follow a legally defined payment schedule (the calendrier d’appels de fonds, set by Article R.261-14 of the Code de la construction et de l’habitation), tied to the progress of construction — up to 35% on completion of the foundations, up to 70% once the building is watertight, and up to 95% at completion, with the final 5% due on delivery. Each instalment generally includes VAT at the applicable rate, which is worth factoring into cash-flow planning, particularly where funds are being transferred from abroad, and where financing is arranged alongside the purchase (see our page on mortgages and loan security).

An Alpine specificity: leaseback apartments and VAT recovery

This is one of the more distinctive features of the ski property market, and one that is often unfamiliar to overseas buyers.

Many new-build apartments in ski resorts — Val Thorens and Alpe d’Huez among them — are sold as part of a “résidence de tourisme” (a managed tourist residence) or a similar managed-residence format. Under this arrangement, the buyer signs a long-term commercial lease with an operator, who runs the residence and provides guests with parahotel services — reception, breakfast, linen and regular housekeeping among them.

Where at least three of these four services are genuinely provided, the letting is treated as a commercial, VAT-liable activity under Article 261 D of the Code Général des Impôts — and this is what allows the buyer to reclaim the 20% VAT paid on the purchase price.

Example: a buyer purchases a new apartment in a managed residence in Alpe d’Huez for €300,000 including VAT, of which around €50,000 represents VAT at 20%. After signing a commercial lease with the operator (typically for a minimum of nine years, renewable), the buyer can generally reclaim the VAT within several months of delivery, bringing the effective cost down to around €250,000. We look at the ongoing tax treatment of this kind of rental activity in our guide to French property rental income and taxation.

The catch — and it is one worth being aware of before considering an early resale — is that VAT reclaimed on a building is only considered fully vested after a 20-year holding period (the délai de régularisation set out at Article 207 of Annex II to the Code Général des Impôts). If the commercial lease ends, or the property is sold outside the scheme, before the 20 years are up, a proportion of the VAT originally reclaimed generally needs to be repaid — calculated at one-twentieth for each year remaining.

A sale can often be structured to avoid this repayment. Under Article 257 bis of the Code Général des Impôts, where the buyer is also VAT-registered and takes over the existing commercial lease — effectively continuing the letting activity without interruption — the transfer can generally be treated as the transfer of a going concern, with no VAT adjustment due. Getting this right in the deed of sale is something a notary would normally take particular care over, since it needs to be documented at the point of signature rather than corrected afterwards.

For owners based outside France who are considering the sale of a leaseback apartment before the 20-year period has elapsed, it is generally worth raising this with a notary at an early stage — ideally before agreeing a sale price, since the potential VAT exposure can be a meaningful part of the negotiation.

Older properties resold by a professional seller

Example: a property trading company purchases an older chalet in the Tarentaise valley, carries out renovation works, and resells it six years later.

➡ Because the chalet was completed more than five years ago, the sale is generally VAT-exempt, and standard registration duties apply instead.

There is a further nuance worth being aware of. Where a professional seller purchased the property from a private individual, with no VAT to recover on acquisition, a subsequent resale may be subject to VAT calculated only on the seller’s margin rather than on the full price — a mechanism generally referred to as “TVA sur la marge”. This can affect the final price meaningfully, and is an area where specialist advice is usually worthwhile; where the seller operates through a company structure, our page on business and company law covers the wider legal side of running that kind of activity in France.

Resale by a private, non-VAT-registered individual

Example 1: an owner sells a family chalet near Alpe d’Huez which has been owned and used privately for seven years.

➡ No VAT applies, and standard registration duties are payable by the buyer.

Example 2: an individual bought an off-plan apartment in Val Thorens three years ago (so it remains “new” for VAT purposes) but is now reselling it, having never let it out commercially.

➡ Because this seller is a private individual with no VAT registration, the sale is generally VAT-exempt.

A word of caution: this position can shift where the seller’s activity starts to look more “professional” than private — for example, where the same individual has bought and resold several new properties within a short period, or where the apartment was originally acquired under a leaseback scheme (Section 3), in which case the rules on VAT recovery and adjustment would apply instead of a straightforward exemption.

Why this deserves particular attention from non-resident and international buyers

• Advertised prices: in France, the price quoted for a new-build property generally already includes VAT, which can look different from a UK convention of listing a price before Stamp Duty Land Tax.
• Payment timing: staged VEFA payments, often transferred internationally, typically each include VAT, so currency and timing planning can matter.
• Residency is not the deciding factor: whether VAT applies, or a VAT adjustment is owed on resale, depends on the seller’s status and the property’s history — not on where the seller or buyer lives. A non-resident owner of a leaseback apartment remains subject to the same 20-year adjustment mechanism as a French resident.
• Cross-border resales: for owners based outside France considering the sale of an Alpine leaseback property, coordinating the VAT position with a notary before instructing an estate agent can help avoid a mismatch between the marketed price and the true net proceeds.

For buyers still deciding where to look, our guide on how and where to buy a ski chalet in France covers the wider resort-by-resort picture that these VAT rules sit alongside.

Key points to remember

• A property is “new” for VAT purposes if completed less than five years ago, based on its completion declaration, whatever the ownership history since.
• VAT-registered sellers include developers, property trading companies and, importantly for the Alps, individuals who have recovered VAT through a leaseback arrangement.
• A new-build ski apartment purchase usually combines 20% VAT, generally included in the price, with a reduced registration duty of 0.715%.
• Leaseback and managed-residence purchases carry a 20-year VAT adjustment period; an early exit can trigger a partial repayment, though this can often be managed through the structure of the sale.
• A notary can help confirm the applicable VAT position before a transaction is agreed, which tends to be particularly useful where a resale or an off-plan purchase is involved — as covered more generally on our real estate page.

Summary tables

General VAT regimes

In summary

Real estate VAT in France brings together several distinct rules — the seller’s status, the property’s age and, in the Alps particularly, the mechanics of leaseback schemes — that do not always overlap with what overseas buyers are used to at home. Whether a transaction involves a new-build purchase, a leaseback resale, or an older property changing hands, it is generally advisable to check the applicable VAT position with a notary at an early stage of the project, so that the price agreed reflects the actual tax treatment of the sale.

Sources

• Notaires de France — TVA immobilière et vente d’un bien immobilier
• Code Général des Impôts — Article 257 bis (transfer of a going concern / no VAT adjustment on resale)
• Code Général des Impôts, Annex II — Article 207 (20-year VAT regularisation period for buildings)
• BOFiP-Impôts — Article 261 D CGI: parahotel services and VAT liability
• Service-public.fr — VEFA payment schedule (Article R.261-14 CCH)

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