The commitment to build (article 1594-0 G, A of the French Tax Code) allows a VAT-taxable person acquiring a building to replace the proportional transfer duties (DMTO) — 6.32% of the price in most French départements in 2026, until 31 March 2028 — with a fixed duty of €125, in exchange for an obligation to produce a new building, or to complete an unfinished one, within four years of the acquisition. On a €400,000 operation, the saving exceeds €25,000. The mechanism is central to the financing of development and heavy-refurbishment operations.
Where a VAT-taxable person acquires a building and undertakes, in the deed, to carry out works leading to the production of a new building — or to the completion of an unfinished building — the acquisition escapes the proportional transfer duties. It bears only a fixed duty of €125 (French Tax Code, art. 1594-0 G, A).
The stakes are anything but symbolic. Since the increase introduced by the 2025 Finance Act, transfer duties reach 6.32% of the price in the départements that raised their rate to 5% for deeds executed and agreements concluded between 1 April 2025 and 31 March 2028 (almost all of them), and 5.81% in the others. On a €400,000 acquisition intended for a development operation, the commitment to build represents a saving of some €25,000, which can be put to work in the financing plan for the works. That figure holds for an acquisition subject to the ordinary-law duties (non-taxable seller, building completed more than five years earlier, or VAT on the margin). Where the acquisition is itself subject to VAT on the full price (building land acquired from a taxable person, new building), the duties payable without a commitment are only 0.715% (French Tax Code, art. 1594 F quinquies, A) and the saving is limited to that fraction.
The counterpart is a firm undertaking: to carry out the works within four years of the acquisition, compliance being proved by filing special return n° 940-SD within the month of completion (operations giving rise to a self-supply) or, in other cases, by filing with the town hall the declaration certifying the completion and conformity of the works. If the undertaking is not met, the duties become payable within the month following the expiry of the period, together with late-payment interest running, in practice, from the acquisition. Everything is therefore decided before signature: the characterisation of the works, the calibration of the period and the drafting of the clause.
The undertaking covers works leading to a new building in tax terms:
The exemption is confined to the land necessary for the construction:
The undertaking is treated as met where, before the period expires, the purchaser evidences the performance of the works:
The four-year period may be extended by one year, renewable:
The whole security of the undertaking rests on this characterisation (French Tax Code, art. 257, I, 2, 2°). A building is new, for VAT purposes, where it has not been completed for more than five years and results either from a new construction, or from the addition of storeys, or from works that have restored one of the following elements to an as-new condition.
Restoration to an as-new condition of the majority of the foundations, or of the majority of the elements other than foundations determining the resistance and rigidity of the structure, or of the majority of the substance of the façades (mere refacing excluded).
Restoration to an as-new condition, as to at least two thirds of each of them, of the six fit-out elements: non-load-bearing floors, external door and window frames, internal partitions, sanitary and plumbing installations, electrical installations and heating (the last being taken into account only for operations carried out in mainland France). Where all the floors are load-bearing and the works do not fall within the reduced VAT rate of article 279-0 bis, the tax authorities accept, for the purposes of the commitment to build, that only the other five elements be taken into account (BOI-ENR-DMTOI-10-40, § 230).
In heavy refurbishment, the characterisation is assessed element by element, on the basis of quotes and measurements — and it is what decides whether the commitment to build is tenable. An operation that does not reach those thresholds is better suited to the undertaking to resell (land registration tax at 0.715%, 5-year period).
The commitment to build may be substituted for an undertaking to resell, and vice versa, under strict conditions — see the substitution of undertakings. Where the property is resold during the period, the undertaking may be taken over by the sub-purchaser.
The firm works daily on the structuring of real-estate operations relying on the commitment to build: pre-acquisition analysis of the tax feasibility of the works, drafting of the undertaking clauses in coordination with the notary, monitoring of the periods and handling of extension requests, securing of substitutions and assumptions of undertakings.
Where the tax authorities challenge the position — characterisation as a new building disputed, period expired, evidence of completion considered insufficient — we defend the taxpayer both in tax audits and in litigation.
The firm is recognised for its practice in real-estate VAT and taxation (strong reputation with Leaders League, firm listed in Best Lawyers 2026 for tax law), and publishes regularly on these questions in practitioners' journals (Defrénois, Lextenso).
Any VAT-taxable person acting as such: a developer, a property dealer, a real-estate company, an operating company. The undertaking must be given in the deed of acquisition. A private individual who is not a taxable person cannot benefit from it.
The proportional transfer duties — 6.32% of the price in most départements in 2026, a rate applicable to deeds executed and agreements concluded until 31 March 2028 — are replaced by a fixed duty of €125. On a €400,000 acquisition, the saving is around €25,000; on €2 million, it exceeds €125,000. That gain assumes an acquisition subject to the ordinary-law duties: if the acquisition is itself subject to VAT on the full price, the duties payable without a commitment are only 0.715% and the saving becomes marginal.
The transfer duties initially exempted become payable within the month following the expiry of the period, together with late-payment interest, which in practice runs from the acquisition and not from the end of the four-year period. Hence the importance of anticipating: a request for a one-year renewable extension, at the latest within the month following the expiry of the period; a substitution of an undertaking to resell, possible only within five years of the initial undertaking and retroactive to that date (the resale must therefore take place before the fifth anniversary of the acquisition, at a cost of 0.715% in duties plus late-payment interest); or the assumption of the undertaking by a sub-purchaser where the property is resold.
Not on the same base, but they can follow one another: an undertaking to resell may be replaced, before it falls due, by a commitment to build, and vice versa, subject to conditions. Since the Act of 9 March 2010, that substitution is made by a declaration sent to the tax office by registered letter with acknowledgement of receipt, and the new undertaking takes effect on the date it is given, the four-year period running from that date (French Tax Code, art. 1594-0 G, A, II; annex III to the French Tax Code, art. 266 bis, V). The earlier case law (Cass. com., 13 déc. 2011, n° 11-11.951) allowed substitution by a supplementary deed, provided that it took place before the expiry of the resale period: that timing requirement still stands. It is a valuable tool where the project changes in the course of the operation.
The normal route is the mention in the deed. The tax authorities nevertheless accept that an omitted undertaking may be given in a supplementary deed presented to the registration office (BOI-ENR-DMTOI-10-40, § 270); the duties already paid are then refunded upon claim, within the period of article R* 196-1 of the French Tax Procedure Code (in practice until 31 December of the second year following the payment of the duties). The four-year period nevertheless runs from the acquisition. The analysis must be conducted case by case, the conditions being strict.
The four routes that make a building new, with the thresholds applicable to the structural shell and to the fit-out elements. Summary diagram.
Voir la page Pillar pageLand registration tax reduced to 0.715% against a resale within 5 years (French Tax Code, art. 1115) — the property dealer's other undertaking.
Voir la page FlexibilitySwitching from one undertaking to the other where the project changes, without losing the benefit of the regime.
Voir la page ProcedureThe request for a one-year renewable extension: form, time limit, tacit acceptance.
Voir la page CostingThe four components of the fees and the simulator comparing the three acquisition scenarios.
Voir la pageThe firm assists developers, property dealers and real-estate companies throughout the cycle: characterisation of the undertaking, drafting, monitoring of the periods, litigation.
The information on this page is provided for documentary purposes and does not constitute legal or tax advice. State of the law: July 2026 — transfer duties at the rate resulting from the 2025 Finance Act, applicable until 31 March 2028 in the départements that voted the increase.
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