Friday, May 17

Tax and Property Renovations

In France, sales tax (called barrel in the UK or sales tax in the U.S.A.) is called TVA, which stands for Tax on Value Added (or in the original French: Taxe sur la Valeur Ajoutée). It is set to 19.6% (suitable to a lot of items as well as services) or 5.5% (relevant to some goods as well as solutions).

TVA (BARREL) on French Residential Property Renovations & Extensions

If you are buying a residential or commercial property in France, you must take into consideration that products and also work expenses for remodelings or minor extensions are taxed at 5.5% instead of 19.6% supplied that the following 3 problems are satisfied:

  • The house is at the very least 2 years of age. If your residence is simply under 2 years old, you may desire to wait a few months till it goes across the 2-year threshold, lowering your tax price from 19.6% to 5.5%.
  • The restorations are minor to tool in size. If your property requires significant improvements, it might be worth staging this right into different smaller remodelings over time, in order to gain from the lowered tax obligation rate. Private jobs done within a 2 year period can be considered as a solitary thing, so significant products might need to be staged to happen more than 2 years apart to avoid the ‘significant renovation’ threshold.
  • The work is done by a registered professional individual. It is suggested to have the individual doing the work provide a composed quote (recognized in French as a ‘devis’), which should show their TVA registration number. This way you have actually created paper ahead of time revealing that they can and will charge the work at 5.5%.
  • Note that the reduced price of 5.5% is just appropriate if all 3 problems are fulfilled. If, for instance, you buy the products on your own rather than having the tradesperson purchase them, you will certainly wind up paying 19.6%. Of course, you can still get and also pay for the products yourself (for instance, if you do not want a workman to leave the job just to obtain even more materials) however make certain that it is bought under the tradesperson’s account to make sure that you can gain from the lower tax obligation price.
  • Particular additions (such as a pool or a tennis court) are considered ‘luxury things’ and also are particularly left out from the reduced rate. If you are not sure if the prepared work qualifies or not, make certain that the tradespeople doing the job provide a composed price quote showing the minimized rate (as defined over) or validate with your local tax office.

As an example of the worth of the decreased tax obligation rate, I lately had plumbing charge me 20 euros to mount a 200 euro radiator. If I had purchased the radiators as well as mounted them myself it would certainly have cost 239.2 euros (200 euros at 19.6% tax) whereas having an expert plumbing technician do the work was only 232.1 euros (220 euros at 5.5%). It was cheaper to have a specialist do the job than to do it myself!

When the job is completed, the tradesperson must offer you a paper licensing that the work was done at the lowered rate of 5.5%. All such documents must be saved till completion of the fifth year adhering to the completion of the job, as you are lawfully needed to supply such records should the French tax workplace demand it. In practice, this is extremely uncommon, however, it is worth filing the paperwork simply in case. Find out how to increase your property value by reading these tips.

Although a created quote from a professional tradesman pricing quote 5.5% means that he can only bill you this quantity, if the tax obligation office should check out (not likely, however possible) as well as determine that 19.6% schedules, it is you as opposed to the tradesman that will certainly be in charge of paying the extra tax obligation to the tax obligation office. Certainly, you can try recovering the extra prices from the tradesman that exaggerated yet success in this action would depend upon the certain circumstances.