Real-estate taxation — Transfer duties

The undertaking to resell

The undertaking to resell (article 1115 of the French Tax Code) allows a VAT-taxable person acquiring a building to pay land registration tax at the reduced rate of 0.715%, instead of proportional transfer duties — 6.32% of the price in most départements in 2026, until 31 March 2028 — in exchange for an undertaking to resell the property within five years. On a €300,000 acquisition, the saving is around €16,800. It is the property dealer's everyday working tool, open since 2010 to all VAT-taxable persons.

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— In brief
What
Land registration tax reduced to 0.715% instead of proportional transfer duties (French Tax Code, art. 1115)
For whom
VAT-taxable persons: property dealers, developers, real-estate companies, real-estate professionals
Condition
Resell the property within 5 years of the acquisition — 2 years for sales by lots triggering the tenant's pre-emption right
Flexibility
Early waiver possible before the deadline (balance of duties and late-payment interest) · substitution of a commitment to build, free of duty · successive acquisitions between taxable persons within the first purchaser's period
Limit
No extension outside a ZAC; substitution of a commitment to build possible before the deadline
— 01

The buy-to-resell regime for professionals

Without a favourable regime, the acquisition of an existing building bears transfer duties at a rate of 6.32% in most départements following the increase introduced by the 2025 Finance Act, applicable to deeds executed and agreements concluded between 1 April 2025 and 31 March 2028; 5.81% in the eleven départements that have stayed at 4.50%, and 5.09% in the Indre (DGFiP table as at 1 June 2026). In the Île-de-France region, an additional 0.6% tax applies to offices, retail premises and storage premises (French Tax Code, art. 1599 sexies), and remains payable even where an undertaking to resell is given.

Article 1115 of the French Tax Code brings that charge down to land registration tax of 0.715% where the purchaser, being a VAT-taxable person, undertakes in the deed to resell the property within five years. The regime covers acquisitions of buildings, but also of going concerns (fonds de commerce) and of shares in real-estate companies (French Tax Code, art. 1115); only acquisitions of buildings bear the 0.715% tax, the others being exempt. Historically reserved for property dealers, the regime was made neutral and extended to all taxable persons by the 2010 reform of real-estate VAT.

The undertaking is flexible in operation: a purchaser who gives up the idea of reselling may regularise its position before the deadline, by paying the balance of duties, assessed at the rate in force on the day of the acquisition, together with late-payment interest (French Tax Code, art. 1840 G ter and 1727). The statute imposes no condition as to the identity of the final buyer or as to the resale price; it does, however, require a genuine sale, and a resale to a related entity is exposed to abuse of law if it has no purpose other than a tax one. Where the undertaking is not complied with by the deadline, the additional duties become payable, together with late-payment interest. The discipline of the regime therefore comes down to one thing: the timetable.

— 02

Conditions and implementation

01

Three cumulative conditions

  • Being a VAT-taxable person within the meaning of article 256 A of the French Tax Code: in the firm's practice, this is the most frequent ground of reassessment, the tax authorities contesting the taxable-person status of wealth-holding structures
  • Acquiring an asset falling within the scope of the regime: a building, a going concern (fonds de commerce) or shares in a real-estate company (French Tax Code, art. 1115), the building having to be located in the territory where land registration tax is levied (metropolitan France and the overseas départements)
  • Giving the undertaking in the deed of acquisition to resell within 5 years
02

The period reduced to two years

The period falls to two years for resales by lots that trigger the tenant's pre-emption right (residential buildings sold off unit by unit, known as ventes à la découpe).

  • The point has generated substantial litigation on the computation of the period: the period runs from the acquisition (Cass. com., 14 févr. 2024, n° 22-17.541) and applies where the lots are occupied at its expiry (Cass. com., 9 oct. 2024, n° 22-20.175)
  • See our analysis: the reduced period of the undertaking to resell, published in the Defrénois
03

The resale: a freedom with limits

  • No statutory condition as to the identity of the sub-purchaser or as to the price
  • A genuine sale is, however, required: an outright contribution to a company (apport pur et simple) and a transfer into a fiducie do not amount to a resale (French Tax Code, art. 1115, para. 3), nor does the cancellation of the shares by the shareholder (Cass. com., 24 nov. 2021, n° 19-17.281); the loss of the real-estate character of the shares acquired triggers forfeiture of the regime (Cass. com., 2 févr. 2010, n° 09-10.384)
  • A resale to a related entity remains possible, but is exposed to abuse of law if it is purely tax-driven
  • See our analysis: undertaking to resell and abuse of law
04

Where the undertaking is not complied with

  • The additional duties become payable (the difference between the full rate and 0.715%), assessed at the rate in force on the day of the acquisition, and not at the rate applicable on the day of forfeiture
  • Together with late-payment interest of 0.20% per month, counted from the first day of the month following the expiry of the statutory period for presenting the deed of acquisition for registration (French Tax Code, art. 1840 G ter and 1727; BOI-ENR-DMTOI-10-50, § 110)
  • A purchaser who gives up the idea of reselling may regularise its position before the deadline, with the same financial consequences; no penalty specific to article 1115 is added, the ordinary penalties being incurred only in the event of a deliberate failure to comply or of late payment
— 03

The period expires without a resale: what are the ways out?

Unlike the commitment to build, article 1115 provides for no extension, save in the case of buildings located in a zone d'aménagement concerté (ZAC) acquired by the zone developer (French Tax Code, art. 1594-0 G, A, IV bis). Three routes remain open to a professional who is unable to resell.

1. Substituting a commitment to build

The most protective route: switching to a commitment to build, by a simple declaration to the tax office (a registered letter setting out the references of the deed), where the operation can evolve towards the production of a new building. The substitution gives rise to no duty, the 0.715% tax already paid remaining acquired to the Treasury (French Tax Code, art. 1594-0 G, A, II; BOI-ENR-DMTOI-10-50, § 100); the fixed duty of €125 is the one applicable to an acquisition placed from the outset under a commitment to build. See the substitution of undertakings.

2. Extension: reserved for ZAC developers

No application for an extension is provided for in the general case: the tax authorities may neither extend the period nor waive the land registration tax, only the late-payment interest being capable of remission or settlement (French Tax Procedure Code, art. L. 247, 2° and 3°). The only statutory extension, annual and renewable, concerns buildings located in a ZAC acquired by the zone developer (French Tax Code, art. 1594-0 G, A, IV bis). See the extension of the undertaking to resell.

3. Force majeure

The last line of argument: showing that an unforeseeable, irresistible and external event made the resale impossible. The case law is demanding (Cass. com., 27 nov. 1984, SA Bâti Service, n° 83-12.714; Cass. com., 19 juin 1990, n° 89-10.127: a motorway project known to professionals is not unforeseeable); the file is built upstream, with supporting evidence.

And what about an early resale to another taxable person?

Where the sub-purchaser is itself a taxable person and in turn gives an undertaking to resell, the initial period is binding on it: it is the person holding the property at the expiry of the five years counted from the first acquisition who bears the additional duties (French Tax Code, art. 1115, para. 2). This is not the assumption of an undertaking specific to the commitment to build: each successive purchaser gives its own undertaking, within the first purchaser's period.

— 04

Our approach at the firm

The firm advises property dealers, developers and real-estate companies throughout the life cycle of the undertaking to resell: characterisation of taxable-person status before the acquisition — in our practice, the point the tax authorities attack first — drafting of the clauses, monitoring of the timetable and arbitration at the end of the period between resale, substitution and early waiver.

In tax audits as in litigation, we defend operators whose regime is challenged: contested taxable-person status, computation of the reduced two-year period, abuse of law on intra-group resales.

The firm publishes regularly on these questions in practitioners' journals — Defrénois, Lextenso — and 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).

  • Best Lawyers 2026 — Tax Law
  • Leaders League — Strong reputation, VAT
  • Publications in Defrénois / Lextenso
— Frequently asked questions

The undertaking to resell in practice

Who can benefit from the undertaking to resell?

Any VAT-taxable person within the meaning of article 256 A of the French Tax Code, acting as such, who acquires a building, a going concern (fonds de commerce) or shares in a real-estate company (French Tax Code, art. 1115); for a building, the property must be located in metropolitan France or in an overseas département. Property-dealer status has no longer been required since 2010 — but taxable-person status remains, in our practice, the point most closely checked by the tax authorities.

What is the saving?

The land registration tax of 0.715% replaces transfer duties of 6.32% (the standard 2026 rate, applicable to deeds executed and agreements concluded until 31 March 2028). On €300,000, the duties fall from approximately €18,960 to €2,145, i.e. a saving of around €16,800; on €1 million, the difference exceeds €56,000.

Can the property be resold to a company in the same group?

The statute imposes no condition as to the identity of the sub-purchaser. It does, however, require a genuine sale: an outright contribution to a company (apport pur et simple) or a transfer into a fiducie does not amount to a resale (French Tax Code, art. 1115, para. 3). An intra-group resale may, moreover, be recharacterised on the ground of abuse of law if it has no purpose other than a tax one. The substance of the transaction is prepared upstream.

Can the five-year period be extended?

No, except for ZAC developers, for whom an annual renewable extension is provided (French Tax Code, art. 1594-0 G, A, IV bis). The commitment to build is better served: there, the extension is granted on application, the absence of a reasoned refusal within two months amounting to acceptance. Outside a ZAC, what remains is the substitution of a commitment to build before the deadline, which gives rise to no duty, or force majeure; the tax authorities may remit only the late-payment interest, never the duties (French Tax Procedure Code, art. L. 247).

What happens if I ultimately keep the property?

You may waive the undertaking before the deadline: the balance of duties is then payable within one month, assessed at the rate in force on the day of the acquisition, together with late-payment interest of 0.20% per month (French Tax Code, art. 1840 G ter and 1727). This is often the soundest choice where a rental project replaces the resale project — it is quantified before the deadline, not after.

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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, subject to any earlier end date provided for by the departmental resolution.