The sale of building land by an individual is in principle outside the scope of VAT: it is mere management of private assets. But the CJEU, in its rulings of 15 September 2011 (Slaby, C-180/10 and Kuć, C-181/10), followed by the French Conseil d'État, established the concept of active land-marketing steps: an individual who deploys, with a view to the sale, means similar to those of a producer, a trader or a service provider is regarded as carrying on an economic activity and becomes a taxable person within the meaning of article 256 A of the French Tax Code, and the sale becomes subject to VAT. France has not exercised, for building land, the option to treat a one-off transaction as taxable that article 12 of the VAT Directive leaves open to Member States: the mere fact that a sale is occasional confers no taxable-person status of its own, and everything turns on whether an economic activity is made out. The indicators relied on by the Court of Justice and by the Conseil d'État are, first and foremost, servicing works and professional-standard marketing means; dividing the land into plots and using an intermediary carry weight only where they are combined with one of those. This page sets out the operational analysis grid.
In its two rulings of 15 September 2011 (Słaby, C-180/10 and Kuć, C-181/10), the CJEU drew a line between the mere management of private assets (outside the scope of VAT) and an economic activity within the meaning of article 9 of the VAT Directive (transposed by art. 256 A of the French Tax Code). The criterion adopted: the deployment, in preparation for the sale, of means similar to those used by a producer, a trader or a service provider.
The Conseil d'État transposed this grid into French law, holding that the sale of building land by an individual is subject to VAT where it goes beyond mere asset management and results from active land-marketing steps involving means similar to those of a professional. See in particular CE 9 June 2020, no. 432596: servicing works of sufficient importance make out the active step on their own, even where the seller has deployed no professional-standard selling means. The Conseil d'État has since made clear that steps taken as part of a land-development operation on building land also qualify, where the operation is on such a scale that it cannot be regarded as mere management of private assets (CE 9 December 2022, no. 459206; in that case, however, the Conseil d'État upheld the appeal court's finding that the steps taken did not qualify).
The consequences are heavy: VAT charged at 20% on the sale (recoverable where the purchaser is itself a taxable person), filing obligations under the taxable-person regime (VAT returns, records, etc.), and potential reassessment of earlier sales within the 3-year reassessment period (extended to 10 years in the event of a hidden, undeclared activity). The grid of indicators must be mastered in order to make the right choices upstream.
The analysis rests on a body of converging indicators. A single element can nonetheless be enough where it is sufficiently made out: in the case decided by the Conseil d'État on 9 June 2020 (no. 432596), servicing works representing more than 40% of the sale price carried the characterisation, even though the seller had deployed no professional-standard selling means.
Carrying out servicing works on the land (connection to water, electricity and sewerage networks, roads) in preparation for the sale is the clearest indicator. Such works involve a financial and operational commitment that goes beyond mere asset management and directly gears the property towards marketing to builders.
Dividing land into several plots is not, on its own, decisive: the Court of Justice holds that subdividing the land before the sale in order to obtain a better overall price may fall within the management of private assets (CJEU 15 September 2011, Słaby and Kuć, C-180/10 and C-181/10, para. 38), and the French tax authorities' guidance says the same, adding the number of plots sold, the period over which the operations run and the size of the proceeds (BOI-TVA-IMM-10-10-10-10, § 60). Plot division carries weight only where it is combined with servicing works of a significant amount or with professional-standard marketing means.
What counts here is the seller's own resources. Entrusting the sale to a notary or to an estate agency paid solely by a commission payable by the purchaser does not amount to an active marketing step; conversely, committing the seller's own resources, such as opening a sales office or guaranteeing commissions paid to an appointed agent, tends to reveal a competitive, professional approach (BOI-TVA-IMM-10-10-10-10, § 60). Advertising hoardings, listings on specialist websites, sales brochures and canvassing of builders and developers funded by the seller follow the same logic.
Obtaining permits (development permit, building permit, various authorisations) ahead of the sale is a further indicator. An individual who personally files a development permit to enhance the value of the land with a view to resale is engaging in a development approach that goes beyond the simple sale of existing assets. The Conseil d'État counts as active steps those taken as part of a land-development operation on such a scale that it cannot be regarded as mere management of private assets (CE 9 December 2022, no. 459206). Obtaining a development permit is therefore not enough on its own: everything turns on the actual nature and scale of the steps taken.
The creation of a dedicated vehicle (an SCI, a development SAS) or the use of professional advisers (surveyors, town planners, planning-law specialists) to run the operation reinforces the characterisation of active steps. Conversely, the isolated sale of inherited land, without preparatory steps, remains in principle outside the scope of VAT.
The firm advises individuals holding land assets (inheritances, family ownership splits, divisions of rural estates) on the characterisation of their disposal operations. The objective: avoiding an unintended shift into VAT liability, or deliberately structuring the operation as a taxable person in order to benefit from the associated advantages (recovery of input VAT, optimisation for taxable purchasers).
In the event of a tax audit or reassessment, we build the defence around the characterisation of the indicators, the economic coherence of the operation and legal certainty for earlier periods.
When, in preparation for the sale, the individual deploys means similar to those of a producer, a trader or a service provider, under the grid laid down by the CJEU in the Słaby (C-180/10) and Kuć (C-181/10) rulings of 15 September 2011. The simple sale of land that was inherited or held as a private asset, without preparatory works or organised marketing, remains in principle outside the scope of VAT.
The leading indicator is the carrying out, at the seller's expense, of servicing works (network connections, roads) of a significant amount. Plot division and planning authorisations are not enough on their own: the Court of Justice holds that subdividing the land beforehand, the number of plots sold, the period over which the operations run and the size of the proceeds may all fall within the management of private assets (CJEU 15 September 2011, Słaby and Kuć, para. 38; BOI-TVA-IMM-10-10-10-10, § 60). They carry weight only where they are combined with such works or with professional-standard marketing means.
Not in itself. Engaging a standard estate agency to sell inherited land remains compatible with mere asset management. But the combination of professional intermediation with other indicators (subdivision, servicing works, active canvassing of developers) tips the analysis. Accumulation is not, however, a condition: a single sufficiently well-made-out indicator, such as servicing works of a significant amount, can carry the characterisation on its own (CE 9 June 2020, no. 432596).
Three main ones: (1) VAT charged at 20% on the sale price; (2) filing obligations (registration, monthly or quarterly VAT returns, records of transactions); (3) correspondingly, a right to deduct input VAT on servicing works and preparatory costs (a substantial advantage). Where the purchaser is a taxable person, the VAT is generally recoverable by the purchaser, and therefore economically neutral.
The reassessment period is in principle 3 years (LPF art. L.176). But if the individual has neither declared the activity nor registered, the tax authorities may invoke a hidden (undeclared) activity (LPF art. L.176) and extend the period to 10 years, with in addition the 80% surcharge under art. 1728, 1, c of the French Tax Code. The defence involves demonstrating an excusable error or challenging the characterisation of active steps. See our analysis of the hidden (undeclared) property-dealer activity.
Three lines of action: (1) a pre-transaction analysis of the body of indicators with a tax lawyer; (2) explicit structuring of the vehicle (remaining within private assets, or knowingly creating a taxable structure); (3) an informed choice between VAT exposure (with input-VAT recovery) and remaining outside the scope. An upstream audit costs far less than a subsequent reassessment.
Dividing an inheritance into family lots (lifetime gift with division, estate partition) is not, in itself, an active marketing step. But if the heirs then organise the coordinated marketing of their lots, with collective servicing works and marketing efforts, the analysis changes. Particular vigilance is required for co-ownerships in indivision that decide to develop the land before selling.
Topics frequently linked with active land-marketing steps.
General framework of real-estate VAT: scope, regimes, options, exemptions.
Voir la page VATOverview of the regimes applicable to real-estate transactions.
Voir la page VATCriteria for mere management of private assets outside the scope.
Voir la page Property dealerRisk of recharacterisation in the event of undeclared transactions.
Voir la pageA confidential initial discussion to analyse the body of indicators, decide on VAT exposure, and secure or defend your operation.
© BENSAID Avocats — The information on this site does not constitute legal advice and is no substitute for personalised tax analysis.
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