Real-estate taxation — VAT guide

Real-estate VAT guide:
transactions, point by point

This guide deals with one question: whether VAT is due when you sell a property (new building, older building, building land, non-building land). The regime of a sale rests on a few articles of the French Tax Code (CGI): Article 256 A (taxable status of the seller), Article 257 (building land and new buildings), Article 261, 5 (exemption for non-building land and for buildings completed more than five years ago), Article 260, 5° bis (election to charge VAT) and Article 268 (VAT margin scheme). The table below gives, for each transaction, the regime, the taxable amount and the provisions, with their numbering in the Code des impositions sur les biens et services (CIBS), which takes over VAT from 1 January 2027. Up to date as of 5 October 2026, including the case law on the identity condition of the margin scheme (CE 27 March 2020, no. 428234, Promialp; CE 11 October 2022, no. 464561).

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— In brief
VAT scope
Seller is a taxable person acting as such (CGI art. 256 A)
Building land
Taxable as of right, on the total price or on the margin
New building
Taxable as of right (completed five years ago or less)
Building over 5 years
Exempt (CGI art. 261, 5, 2°), election possible (art. 260, 5° bis)
VAT margin scheme
CGI art. 268: no right to deduct on acquisition, and identity condition
From 1 January 2027
The same rules move to the CIBS (articles L. 231-7 to L. 231-20)
— Table

Real-estate VAT: which transaction, which regime

Every sale of land or a building falls under one of the rows below. Two questions are enough to place it: is the seller acting as a taxable person, and what exactly is being sold? The table gives the rule, the taxable amount and the provision, in the CGI today and in the CIBS from 1 January 2027; the sections that follow set out the conditions and the case law.

Real-estate VAT: which transaction, which regime. Law in force on 5 October 2026 (French Tax Code, CGI) and numbering applicable from 1 January 2027 (Code des impositions sur les biens et services, CIBS).
TransactionSellerVAT regimeTaxable amountCGI (until 31 December 2026)CIBS (from 1 January 2027)
Building landTaxable person acting as such (professional, company, or private individual taking active marketing steps)VAT as of rightTotal price; margin if the conditions of art. 268 are met (no right to deduct on acquisition, same characterisation at purchase and resale)Art. 256, I; art. 257, I, 2, 1° (definition); art. 261, 5, 1° (a contrario); art. 268; BOI-TVA-IMM-10-20-10Art. L. 211-4; L. 231-7; L. 231-16; L. 231-18 to L. 231-20
Land that is not building landTaxable person acting as suchExempt; election to tax possibleIf elected: total price (margin scheme not available)Art. 261, 5, 1°; art. 260, 5° bisArt. L. 231-16; L. 231-15
New building, completed five years ago or lessTaxable person acting as such (developer, property dealer, company)VAT as of rightTotal priceArt. 256, I; art. 257, I, 2, 2°; art. 261, 5, 2° (a contrario)Art. L. 211-4; L. 231-8; L. 231-12; L. 231-17
Building completed more than five years agoTaxable person acting as suchExempt; election to tax possibleIf elected: total price; margin if the conditions of art. 268 are metArt. 261, 5, 2°; art. 260, 5° bis; art. 268Art. L. 231-17; L. 231-15; L. 231-18 to L. 231-20
Building let under VAT, sold with its leases to a buyer who continues the letting; business or branch of activityVAT-liable person, to another VAT-liable personNo supply: no VAT, no adjustment due by the seller on account of the transfer, the buyer taking over the deduction position; election not availableNot applicableArt. 257 bis; BOI-TVA-IMM-10-10-10-40, § 40 and 50 (Article 257 bis VAT relief)Art. L. 211-107 and L. 211-108
Any land or building, new or oldPrivate individual or person managing private assets, outside any economic activityOutside the scope of VAT, unless active marketing steps are takenNot applicable (transfer duties and, where relevant, capital gains tax)Art. 256 A; BOI-TVA-IMM-10-10-10-10Art. L. 211-17, L. 211-22 and L. 211-23

CIBS numbers: official concordance table published in the Journal officiel of 28 July 2026, reflecting the renumbering made by Ordinance no. 2026-671 of 27 July 2026. The VAT provisions of the CGI are repealed from 1 January 2027, except for a few kept in force until taken over by regulation, including the definition of works that restore a building to a new condition (CGI art. 257, I, 2, 2°).

— 01

An area where every transaction must be characterised before it is priced

Real-estate VAT cannot be reduced to a rate to be applied. Before any computation, the transaction must be properly characterised: is the seller a taxable person acting as such? Is the building new or existing? Building land or built land? Which regime applies (VAT as of right, exemption with or without election, margin scheme, relief on the transfer of a going concern)? Each of these characterisations determines the VAT treatment and the registration duties.

The cost of a recharacterisation is high: VAT reassessment plus late-payment interest under art. 1727 of the French Tax Code (0.20% per month, i.e. 2.40% per year), a 40% or 80% surcharge in the event of deliberate breach or abuse of law (CGI art. 1729), adjustment of input VAT, and forfeiture of the commitment to resell or the commitment to build where applicable. The transaction is secured upstream, in the drafting of the preliminary agreement and the deed.

The firm secures the tax characterisation of every complex real-estate transaction and defends taxpayers against recharacterisations by the tax authorities.

— 02

5 VAT regimes to distinguish when characterising a transaction

Every real-estate transaction must be matched to a specific regime. The grid below structures the analysis.

1. Sale of a new building: VAT as of right

A new building within the meaning of 2° of 2 of I of art. 257 of the French Tax Code (not completed more than 5 years ago, plus new construction or works that restored it to a new condition) sold by a taxable person acting as such is subject to VAT as of right at the rate of 20%. Because the transfer is subject to VAT on the total price, it bears land-registration tax at the reduced rate of 0.70%, i.e. 0.715% including assessment costs (CGI, art. 1594 F quinquies, A). A purchaser who gives a commitment to resell within five years (CGI, art. 1115) is exempt from transfer duties and taxes, but still owes land-registration tax at 0.70%, i.e. 0.715% including assessment costs (CGI, art. 1020; art. 1647, V, b; BOI-ENR-DMTOI-10-50, § 40). The fixed duty of EUR 125 applies, for its part, to an acquisition coupled with a commitment to build within four years (CGI, art. 1594-0 G, A; art. 691 bis), and not to the commitment to resell.

2. Sale of a building > 5 years: exemption + election

Article 261, 5 of the French Tax Code exempts from VAT the sale of buildings completed more than 5 years ago. However, Article 260, 5° bis opens an election to charge VAT, which can be relevant where the seller wishes to avoid an adjustment of previously deducted VAT (in twentieths, CGI ann. II art. 207). The election must be clear and unequivocal in the deed of sale (recent case law).

3. VAT margin scheme (CGI art. 268): identity condition

The VAT margin scheme applies only under two cumulative conditions: (a) the acquisition did not give rise to a right to deduct; (b) an identity condition between the acquisition and the resale, which bears on the legal characterisation of the asset, acquired and resold with that characterisation unchanged (BOI-TVA-IMM-10-20-10, § 20). Dividing the land into lots or carrying out servicing works does not break that identity (CJEU 30 September 2021, Icade Promotion, C-299/20; CE 12 May 2022, no. 416727); a demolition or a transformation that changes that characterisation, by contrast, rules it out. This second condition is of judicial origin: it is not drawn from the text of art. 268 itself, but was laid down by CE 27 March 2020 (Promialp), no. 428234 (converting built land into building land through demolition excludes the VAT margin scheme) and confirmed by CE 11 October 2022, no. 464561 (for building land carved out of built property, identity requires a separate parcel designation from the initial acquisition onwards).

4. Let building sold with its leases, business or branch of activity

Where the sale concerns a building let under VAT whose buyer takes over the leases and continues the letting, or more broadly a totality of assets transferred between persons liable for VAT, no supply is deemed to take place: no VAT on the price, no adjustment of the input VAT deducted by the seller, and the election under art. 260, 5° bis cannot apply (BOI-TVA-IMM-10-10-10-40, § 40 and 50). The conditions, the limits set by case law and the drafting precautions are set out on the page devoted to the Article 257 bis VAT relief.

5. Private individual outside any economic activity: outside the scope

A sale carried out by a private individual not acting as a taxable person (within the meaning of art. 256 A of the French Tax Code) is in principle outside the scope of VAT. Caution, however: the CJEU case law Slaby/Kuć (15 September 2011, C-180/10 and C-181/10), followed by the Conseil d'État, established the concept of "active steps of land marketing": an individual who deploys such means is carrying on an economic activity and becomes a taxable person within the meaning of art. 256 A of the French Tax Code for the sale of building land. Since France has not transposed, for building land, the option to tax occasional transactions opened by article 12 of the VAT Directive, the occasional nature of the sale is, on its own, of no effect.

— 03

Our approach at the firm

The firm secures complex real-estate transactions from the preliminary tax-analysis stage: characterisation of the seller and the purchaser (taxable / non-taxable person, acting as such), of the asset (new / existing, building land / built land, identity of characterisation), of the transaction (isolated sale / transfer of a going concern), and arbitration between the available elections (VAT on the total price, VAT margin scheme, relief on the transfer of a going concern, combination with the commitment to resell or the commitment to build).

Our cross-disciplinary command of VAT, registration duties, corporate income tax, personal income tax and tax litigation allows the transaction to be considered as a whole. We coordinate directly with notarial offices to secure the drafting of preliminary agreements and notarial deeds, and we defend taxpayers when the transaction is challenged by the tax authorities.

— Frequently asked questions

Everything you need to know before a real-estate transaction

What determines whether VAT applies to a real-estate transaction?

Three main criteria: (1) the status of the seller (a person taxable for VAT within the meaning of art. 256 A of the French Tax Code, acting as such); (2) the nature of the asset (building land or not; new building, meaning completed five years ago or less and resulting from construction or works restoring it to a new condition, or building completed more than five years ago); (3) the nature of the transaction (isolated sale, or transfer of a let building with its leases, which follows its own regime). The table at the top of the page combines these criteria.

When is a building "new" for VAT purposes?

Article 257, I 2° of the French Tax Code defines the new building: not completed more than 5 years ago and resulting from new construction or from works that restored the building to a new condition. The structural-work criteria are alternative (a majority of the foundations OR of the elements other than foundations OR of the facades excluding cladding OR a vertical extension). The finishing-work criterion, by contrast, requires that the six elements listed in art. 245 A of Annex II to the French Tax Code (floors that do not carry the strength or rigidity of the structure, external door and window frames, internal partitions, sanitary and plumbing installations, electrical installations and, in mainland France, the heating system) be all restored to a new condition, each of them to at least two thirds. Reaching two thirds on only some of the elements is not enough.

When should the election to charge VAT be made on the sale of a building > 5 years?

The election (CGI art. 260, 5° bis) is relevant where the seller has deducted input VAT (acquisition, works, expenses) and a sale under the exemption would trigger an adjustment in twentieths of the VAT deducted (CGI ann. II art. 207). The election neutralises that adjustment. It is subject to no condition as to the status of the purchaser, and the tax payable by the seller is set out in the deed of sale, which serves as the invoice where it contains the particulars required by art. 242 nonies A of Annex II to the French Tax Code (BOI-TVA-IMM-10-30, § 60); it is, however, only worthwhile where the purchaser can deduct that tax, failing which the tax remains definitively its own cost and increases the price. The election must be clear and unequivocal in the deed.

When does the VAT margin scheme apply?

The VAT margin scheme (CGI art. 268) requires two cumulative conditions: (1) the acquisition did not give rise to a right to deduct (sale between private individuals, exempt sale, etc.); (2) an identity condition between the acquisition and the resale, which bears on the legal characterisation of the asset, acquired and resold with that characterisation unchanged (BOI-TVA-IMM-10-20-10, § 20); dividing the land into lots or carrying out servicing works does not break that identity (CJEU 30 September 2021, Icade Promotion, C-299/20; CE 12 May 2022, no. 416727), whereas a demolition or a transformation that changes that characterisation rules it out. This second condition is of judicial origin (it does not appear in the text of art. 268): it was laid down by CE 27 March 2020, no. 428234 Promialp (converting built land into building land through demolition destroys the identity and excludes the VAT margin scheme) and then confirmed by CE 11 October 2022, no. 464561 (carving building land out of a larger property: the parcel distinction must exist from the initial acquisition onwards).

Can a private individual be a taxable person for VAT on a property sale?

Yes, in exceptional cases. The CJEU case law Slaby/Kuć (15 September 2011), followed by the Conseil d'État, established the concept of active steps of land marketing: a private individual who deploys means similar to those of a producer or a trader (servicing of the land, marketing, professional intermediation) becomes a taxable person within the meaning of art. 256 A of the French Tax Code for the sale of building land, because he is then carrying on an economic activity, and not because the sale would be an occasional one, France having not transposed on this point the option opened by article 12 of the VAT Directive. See our dedicated analysis: Active steps of land marketing.

How do VAT and registration duties interact?

Charging VAT on a transfer does not, on its own, displace proportional registration duties. Only transfers of building land and of new buildings subject to VAT on the total price benefit on that account from land-registration tax at the reduced rate of 0.70%, i.e. 0.715% including assessment costs (CGI, art. 1594 F quinquies, A). By contrast, the sale of a building completed more than five years ago that is subject to VAT under an election, like any sale taxed on the margin (CGI, art. 268), remains subject to ordinary transfer duties: 6.32% in the vast majority of départements, which raised their departmental rate to 5% for deeds executed between 1 April 2025 and 31 March 2028, 5.81% in the eleven départements that stayed at 4.50%, and 5.09% in the Indre (CGI, art. 1594 D, art. 1584 and art. 1647, V, a; DGFiP table of transfer-duty rates as at 1 June 2026). The exemption regimes attached to a commitment given by the purchaser, whether a commitment to resell or a commitment to build, operate independently of VAT. The property dealer who gives a commitment to resell within 5 years (CGI art. 1115) additionally benefits from an extended relief. See our analysis: Commitment to resell & abuse of law.

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