Investors and property companies
Acquisitions and disposals of office, retail or logistics assets, direct holding versus holding through a company, tax structuring of acquisition debt.
Acquisition · Disposal · Financing · Restructuring
Real estate transactions in France: the tax that sets the price
On a French real estate deal, the gap between two structures is often measured in points of price: VAT or transfer duties, asset deal or share deal, a tax undertaking kept or lost. The firm acts for investors, property companies, family offices and developers, from the analysis of the asset to the signing of the deed.
Paris · Geneva · Marseille · Cannes · Lisbon
What does a tax lawyer do on a French real estate transaction?
They price and secure what is not negotiated with the seller: VAT or registration duties on the transfer, the choice between buying the building and buying the shares of the company that owns it, the treatment of the capital gain, the tax undertakings given in the deed and the guarantees that cover the risk after signing.
They step in before the offer, to compare structures, during due diligence, to measure the tax exposure, and up to the deed, to draft the tax clauses and elections. Bensaid Avocats handles these matters on assets ranging from a few million to several tens of millions of euros, and also acts as fiduciary on financings secured by a French fiducie.
— In brief
- For
- Investors, property companies, family offices, asset managers, developers, property dealers, owner-occupiers
- Transactions
- Acquisition, disposal, sale and leaseback, portfolio restructuring, development, refinancing, distressed assets
- What is at stake
- VAT or transfer duties, asset or share deal, capital gains, tax undertakings, guarantees
- What sets us apart
- Structuring and litigation in one team; the firm also acts as fiduciary
— Our view
A real estate deal can no longer be read as a mere transaction
On the same building, the tax on the transfer can move from VAT to registration duties depending on the age of the building, the nature of the works, the status of the seller and the elections made. Selling the company rather than the building shifts the tax base, the rate and the liabilities taken over. A construction or resale undertaking that is not met revives duties years after the deed.
These parameters are decided before the offer and frozen at signing. Our role is to put them on the table early, priced and in writing, so that the negotiation bears on a real price and not a pre-tax one. We work alongside the notary, transaction counsel, the bank and the valuer, without stepping into their remit.
— Who we act for
Different players, one question: what does the deal really cost
Family offices and private wealth
Buying or selling investment property, reorganising ownership between civil companies, holding companies and fiducie, passing on real estate wealth.
Asset managers
Tax review of assets under management, preparation of disposals, tax cost of refinancings and exits.
Developers and property dealers
Margin scheme or full-price VAT, self-supply, off-plan sales, construction and resale undertakings, defence if the relief is challenged.
Owner-occupiers
Carving out the real estate, sale and leaseback, selling the premises with or without the business, capital gain and VAT already deducted.
Foreign investors
Acquiring in France through a foreign structure, tax treaties, the annual 3% tax, French real estate wealth tax and reporting obligations.
— Six types of transaction
What we structure, and the pages that go into detail
01
Acquiring or selling an asset
The structure and the tax on the transfer.
02
Sale and leaseback, carving out the premises
Releasing the value of the building without moving out.
03
Restructuring a portfolio
Direct ownership, civil company, holding company or fiducie.
04
Development, off-plan and property dealers
Favourable regimes that come with undertakings.
05
Financing, refinancing, restructuring
Where security and tax meet.
06
Investing in France from abroad
Holding structure, treaties and annual obligations.
— Recent matters
A few files, without names
These transactions were handled by the firm over the last two years. Clients are not named; amounts are those of the transaction.
01
Regional shopping centre, about €70m
For the buyer: asset deal versus share deal, VAT versus registration duties, election for VAT on the commercial leases and securing the recovery of acquisition VAT. The economics of the deal turned on its tax treatment more than on its corporate terms.
02
Prime Paris building, €33m bond issue
Financing secured by a security and management fiducie over the building. The firm acted both as tax counsel and as fiduciary: VAT and duties on the transfer into and out of the fiduciary estate, treatment of an €11.39m escrow, deductibility of finance costs.
03
Historic Paris building, several tens of millions of euros
Acquisition structured within a few weeks in an unusual legal setting. France-Luxembourg holding chain, €21.7m intra-group loan under the interest limitation rules, withholding tax, and tax treatment of a mandatory cash sweep on disposal or refinancing.
04
Logistics warehouse, €7.7m
Securing the transfer-duty relief obtained against a construction undertaking: new-building test, trade-by-trade review of the second-fix thresholds, use of the administrative tolerance for load-bearing floors. Preventive work, to avoid a clawback of duties with late-payment interest.
05
Development scheme on the French Riviera
Transfer-duty litigation after a challenge to the construction undertaking. The defence turns on the four-year period, the 104-day Covid suspension, the scope of the one-year extension applied for online, and evidence that the works met the new-building test.
06
Hotel asset financed by a €57m bond
Litigation in France, Luxembourg and England over an asset held through a security fiducie, Luxembourg pledges and an English-law intercreditor agreement. The firm leads the litigation strategy and the tax aspects of the fiducie, including exposure to the annual 3% tax.
— Our method
From the analysis of the asset to the deed, a written note at each stage
-
01
Understand the asset
Age and history of the building, works carried out, the seller's status, leases in place, elections already made. That is where the VAT or duties answer lies.
-
02
Price the options
Building or shares, VAT or duties, direct ownership or a company: the cost of each route, at signing and on exit.
-
03
Structure
Choice of structure, tax elections, undertakings in the deed, interaction with the financing and its security.
-
04
Secure
Tax clauses of the deed, tax indemnity, advance ruling where the timetable allows, monitoring of undertakings until they expire.
-
05
Defend
If the tax authority challenges the position taken, the same team defends it, from the reassessment notice to the court.
— FAQ
What we are asked before a real estate transaction
Should I buy the building or the shares of the company that owns it?
It depends on the asset and the seller. The sale of the building falls within VAT or registration duties depending on its situation. The sale of shares in an unlisted real-estate-rich company bears a 5% duty, on the price plus charges, or on market value if higher; but the buyer does not acquire the building: it takes control of a company that keeps its assets, liabilities and tax history. We price both routes, on entry and on exit, before the offer.
Is the sale of a building subject to VAT or to transfer duties?
When sold by a taxable person acting as such, a building completed less than five years ago is in principle subject to VAT. After five years the sale is exempt from VAT and bears transfer duties, unless the seller opts for VAT in the deed; whether the election makes sense depends on the buyer's right to deduct. Major works can make a building new again, and the sale of a let building can fall outside VAT where it is a transfer of a going concern. See our real estate VAT guide.
What is a sale and leaseback, and what are its tax issues?
The owner of the premises sells them to an investor or a leasing company and stays on as tenant. The deal releases cash, but it triggers tax on the capital gain, raises the question of VAT on the sale and on the rent and, if the sale is exempt, may require part of the VAT deducted on the building to be repaid. These points are settled before signing.
Do you work on distressed assets?
Yes, on their tax and fiduciary side: refinancings secured by a fiducie, restructurings in conciliation proceedings, disputes between creditors over a financed asset. We then work with the restructuring advisers and administrators already in place, within our own remit.
Do you work with the notary and transaction counsel?
That is the usual case. We handle the tax side, alongside the notary, transaction counsel, the bank and the valuer, and we hand the file back at the end of the engagement.
How are your fees set?
As a fixed fee whenever the scope can be defined, which is the case for most transactions. A written proposal comes before any work, and the initial scoping call with a partner is not charged.
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— Further reading
Related practice areas
Let's talk about the deal before the offer.
Describe the transaction to us. A partner will get back to you within one business day. Confidential and without commitment.
© BENSAID Avocats. The information on this site does not constitute legal advice.