Towards the end of this year’s summer holiday season, like many others you might dream of having a second home in France or even move there permanently.
You may know that the standard VAT rate in France is 20%. But did you also know that subject to certain conditions, you may qualify for a reduced rate of 10% on work of improvement, conversion and repair of a residential property.
This rate is further reduced to 5.5% if the work you carry out leads to energy conservation and is eligible for the energy saving tax credit.
Some basic rules apply:
* The property can be your main residence or your second home as long as it is at least 2 years old;
* All routine repair and maintenance work as well as renovation and improvement work is eligible for the reduced rate;
* The same is true for an increase in size as long as the net surface of the property is not increased by more than 10%;
* The reduced rate is only available on materials bought from and/or work carried out by a professional registered in France;
* You will have to sign a certificate for the builder and you must retain a copy of it for 5 years so that you can produce it should you receive a request from the French tax authorities.And some pitfalls exist:
And some pitfalls exist:
* If you buy a ruin and renovation/rebuilding work is very significant, the French tax authorities may reclassify your project as a new built. In this case the standard rate of VAT will apply;
* Swimming pools, tennis courts, garages and other large extensions are not eligible for the reduced rate of VAT.