Building land: tax definition, VAT and transfer duties

It is land on which constructions may be authorised under a local urban plan (plan local d'urbanisme), another equivalent planning document, a communal map (carte communale) or article L. 111-3 of the French planning code (article 257, I, 2, 1° of the CGI, as amended by the law of 16 August 2022). The definition is purely objective: it depends on the land's status under the planning documents in force on the date of the sale, not on the purchaser's intention to build or on the terms of the deed. Land located in an urban or to-be-urbanised zone of a local urban plan, in a buildable sector of a communal map or in the urbanised part of a municipality with no planning document is therefore building land, provided that the applicable rules allow constructions to be authorised on it on the date of the sale, even if the purchaser has no intention of building on it.

No. VAT applies as of right only where the seller is a taxable person acting as such: a property dealer, land developer, site developer, property developer or a business selling land used for its activity. A private individual who sells building land as part of the management of personal assets does not act as a taxable person and the sale falls outside the scope of VAT. The line can nevertheless shift where the seller takes active marketing steps or carries out development works comparable to those of a professional (BOI-TVA-IMM-10-10-10-10, § 60 et 70); each situation deserves a specific review.

The margin scheme (article 268 of the CGI) applies where the seller's acquisition of the land carried no right to deduct input VAT, typically a purchase from a private individual. The tax is then charged on the difference between the sale price (including charges, excluding margin-scheme VAT) and all sums paid for the acquisition, not on the full price. The case law has added a condition of identity of legal classification: the Conseil d'État held that the margin scheme requires the property resold to have the same classification as the property acquired (CE, 27 mars 2020, n° 428234, Promialp). Land acquired as built property and resold as building land, after demolition or after division in order to sell bare plots, is therefore denied the margin scheme (CE, 11 octobre 2022, n° 464561). Conversely, the division into plots or the servicing of land acquired as building land does not, in itself, prevent the margin scheme from applying (CJUE, 30 septembre 2021, Icade Promotion, aff. C-299/20 ; CE, 12 mai 2022, n° 416727).

It is the commitment, given in the deed by a taxable purchaser, to resell the property within five years. It reduces the taxation of the transfer to the overall reduced rate of 0.715% (land registration tax at the 0.70% rate provided for in article 1020 of the CGI, plus the 2.14% levy for assessment and collection costs, article 1647, V, b of the CGI), instead of the ordinary duties, whose rate depends on the département and the date of the deed (up to 6.32% in total in the départements that have raised the departmental duty to 5% for deeds executed and agreements concluded between 1 April 2025 and 31 March 2028). The period is reduced to two years for resales by lots that trigger the tenants' pre-emption right and, in the case of successive acquisitions between taxable persons, the first purchaser's period binds the subsequent ones. Where building land is acquired with VAT on the full price, the 0.70% rate already applies as of right (article 1594 F quinquies, A of the CGI) and the commitment serves no purpose; in the firm's analysis, it is only relevant where the seller is not a taxable person or where VAT is due on the margin. If the resale does not take place within the period, the purchaser becomes liable, within one month of the expiry of the period, for the duties from which it had been relieved, plus late-payment interest (article 1840 G ter of the CGI), unless a building commitment is substituted while the period is still running.

It is the commitment, given in the deed by a taxable purchaser, to carry out within four years the works leading to the production of a new building (a new construction or major works restoring a building to new condition) or the works needed to complete an unfinished building. It replaces the proportional duties with a mere fixed duty of 125 euros (article 691 bis of the CGI), which makes it the most favourable regime for a developer or builder. For land intended for individual houses, the exemption is limited to 2,500 sq. m per house. The period may be extended by one year, renewably, on a reasoned request filed no later than one month after its expiry; the tax authorities' silence for two months amounts to acceptance. Failure to honour the commitment, absent an extension, triggers liability, within one month of the expiry of the period, for the duties from which the acquisition had been relieved, with late-payment interest (article 1840 G ter of the CGI).

Yes, the two regimes interact. A purchaser who has given a resale commitment may, before the five-year period expires, substitute a building commitment where its project evolves, for example where a property dealer ultimately decides to build itself. The reverse substitution is more constrained: it is only possible within five years of the initial acquisition, the resale commitment being deemed given on that date, against payment of the 0.715% tax and of the late-payment interest accrued. These switches are subject to precise formal and time conditions: they must be carefully formalised in the deeds and with the tax authorities to preserve the benefit of the preferential regime.

Where the existing building is unfit for any use (a ruin, a building rendered unusable by its lasting state of abandonment, a building subject to a dangerous-structure order (arrêté de péril), an unfinished construction site) and the underlying land is itself located in an area where constructions may be authorised, the published position of the tax authorities treats the whole as building land (BOI-TVA-IMM-10-10-10-20, § 120): the sale then follows the building land regime, with VAT applying as of right if the seller is a taxable person. Conversely, a building that is still usable, even dilapidated or earmarked for demolition, in principle preserves the classification as built property. This factual borderline is a recurring source of tax reassessments: the condition of the building on the date of the sale must be documented precisely.