Real-estate taxation — Transfer duties

Substituting one commitment for the other

The project changes; the commitment can follow. Article 1594-0 G, A, II of the French Tax Code allows a commitment to resell to be replaced by a commitment to build, and conversely, without losing the benefit of the preferential regime: switching to the commitment to build costs no duty at all, whereas switching to the commitment to resell merely makes the reduced land registration tax of 0.715% payable, together with late-payment interest. The operator must still act within the deadlines and declare the change formally to the tax authorities. This is the safety valve of real-estate transactions: it prevents the loss of the preferential regime where the market or the project changes course along the way.

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— In brief
What
Replacing one commitment (resell ↔ build) with the other while keeping the preferential regime (French Tax Code art. 1594-0 G, A, II); no duty when switching to the commitment to build, land registration tax of 0.715% plus late-payment interest when switching to the commitment to resell
For whom
VAT-taxable persons who gave a commitment in the deed of acquisition and whose project changes
Deadlines
Resell → build: before the expiry of the resale period · Build → resell: within 5 years of the commitment given by the first purchaser (beyond 4 years, subject to an extension of the commitment to build)
Formalities
Formal declaration to the tax authorities (Annex III to the French Tax Code, art. 266 bis, V and VI); partial substitution on a pro rata basis accepted by administrative doctrine for the switch to the commitment to build
Risk
Failure to comply with the new commitment: the duties initially exempted become payable, with late-payment interest
— 01

A commitment is not a straitjacket

An operator that gives a commitment to resell or a commitment to build freezes, on the day of the acquisition, an assumption about the future of its transaction. Yet real-estate projects change: a permit becomes complicated, a market turns, an opportunity to build appears where a resale had been planned.

The legislature anticipated this. Article 1594-0 G, A, II of the French Tax Code organises the substitution: the initial commitment is replaced by the other, the preferential regime is preserved, and the transaction does not bear the standard-rate duties by reason of the change. The commitment that is replaced is deemed to have been performed (or, where the switch is towards the resale, the operator is released from it).

A substitution is not a mere letter: it is subject to strict deadlines, to precise declaratory formalities (Annex III to the French Tax Code, art. 266 bis, V and VI), and it may cover only a fraction of the property, the duties then being computed on a pro rata basis (doctrinal tolerance, BOI-ENR-DMTOI-10-50, § 100). Used well, it turns a rigid preferential regime into a tool for steering the transaction.

— 02

The two possible substitutions

01

Resell → build

The purchaser bound to resell finally decides to build:

  • To be carried out before the expiry of the resale period (5 years, or 2 years for unit-by-unit resales)
  • The commitment to resell is deemed to have been performed; the exemption attached to the commitment to build takes over, and no duty is levied on the declaration (the fixed duty of EUR 125 under article 691 bis concerns only an acquisition placed from the outset under a commitment to build)
  • Two routes, two timetables: by declaration sent by registered letter (statutory substitution, French Tax Code art. 1594-0 G, A, II), the four-year period runs from the substitution and the land registration tax already paid remains acquired by the Treasury (BOI-ENR-DMTOI-10-50, § 100); by supplementary deed (a route accepted by administrative doctrine, BOI-ENR-DMTOI-10-40, § 270, and whose deadline was fixed by the Court of Cassation: Cass. com., 13 déc. 2011, n° 11-11.951), the commitment is deemed to have been given in the deed of acquisition, the period runs from that acquisition, and the land registration tax paid may be refunded within the claim period (French Book of Tax Procedures, art. R* 196-1)
  • Useful where an opportunity to produce a new building appears after the purchase
02

Build → resell

The builder gives up and switches to a resale:

  • To be carried out within five years of the commitment to build given by the first purchaser; beyond the fourth year, the substitution presupposes that the commitment to build has been extended (BOI-ENR-DMTOI-10-40, § 490)
  • A supplementary deed, registered with the tax authorities; the land registration tax at the rate of 0.715% becomes payable on the conditions of article 1115, together with late-payment interest running from the first day of the month following the expiry of the statutory period for presenting the initial deed for the registration formality (BOI-ENR-DMTOI-10-40, § 510)
  • Valuable where the permit, the financing or the market make construction inappropriate
03

The declaratory formalities

A substitution must be declared; it is never presumed:

  • A declaration to the tax authorities, by registered letter with acknowledgement of receipt
  • Stating the date and the registration and publication number of the deed containing the commitment to resell, the purpose and scope of the works planned, and the amount of the duties whose exemption is conditional on those works being carried out
  • Basis: Annex III to the French Tax Code, art. 266 bis, V (declaration switching to the commitment to build) and VI (supplementary deed switching to the commitment to resell)
04

Partial substitution

The property may be split between the two regimes:

  • A substitution is possible on only a fraction of the property acquired: a doctrinal tolerance for the switch to the commitment to build (BOI-ENR-DMTOI-10-50, § 100); towards the resale, the supplementary deed merely states the value concerned (Annex III, art. 266 bis, VI)
  • Duties and land registration tax computed pro rata to the value of the fraction concerned
  • A common pattern: building on part of the land and reselling the remainder
— 03

Tax effects and points to watch

A substitution preserves the preferential regime, but it also transfers the risk: it is the new commitment that must now be honoured.

What the substitution preserves

The benefit of the initial regime is consolidated: the commitment that is replaced is deemed to have been performed, and the change does not make the standard-rate duties payable. The transaction continues under the new regime: exemption under the commitment to build where the operator builds (the fixed duty of EUR 125 under article 691 bis applies only to the acquisition, no duty being levied on the declaration), and land registration tax at 0.715% with late-payment interest where the operator resells.

What it does not forgive

Failure to comply with the new commitment brings the whole structure down: the duties initially exempted become payable, together with late-payment interest. The timetable depends on the route taken: a statutory substitution opens a new four-year period running from the date it is given, renewable annually (French Tax Code art. 1594-0 G, A, IV); the supplementary deed, being attached to the deed of acquisition (BOI-ENR-DMTOI-10-40, § 270), keeps the period running from that acquisition. Choosing the wrong route means losing either years or the refund of the duties.

The trade-off in practice

The choice can be quantified: the cost of the additional duties where the commitment is simply abandoned, the feasibility of works meeting the definition of a new building for tax purposes (French Tax Code art. 257, I, 2, 2°), and the period remaining. On mixed transactions, a partial substitution allows fine adjustment.

The alternative: assumption of the commitment

Where the exit takes the form of a resale to another taxable person, the commitment may also be taken over by the sub-purchaser, who continues the initial period. Substitution and assumption combine in chains of transactions.

— 04

Our approach at the firm

The firm intervenes at the pivotal moment when the project departs from the initial assumption: audit of the period remaining and of the conditions for a substitution, comparative costing of the scenarios — substituting, abandoning the commitment, having it taken over — and drafting of the declaration of substitution and of the supplementary deed in coordination with the notary.

Where the tax authorities challenge the position — a substitution held to be out of time, contested formalities, a new commitment not honoured — we defend the operator 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 property-dealer commitments (Defrénois, Lextenso).

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

Substitution of commitments in practice

Does a substitution cost anything?

Towards the commitment to build, no: the declaration is subject to no duty (BOI-ENR-DMTOI-10-50, § 100). Towards the commitment to resell, the supplementary deed makes the reduced tax of 0.715% payable together with late-payment interest (BOI-ENR-DMTOI-10-40, § 510), but not the standard-rate duties. The main financial stake remains compliance with the new commitment: if it is not honoured, the duties initially exempted become payable with late-payment interest.

Until when can a substitution be made?

To move from a commitment to resell to a commitment to build: before the expiry of the resale period. To move from a commitment to build to a commitment to resell: within five years of the commitment to build given by the first purchaser, by registered supplementary deed; beyond the fourth year, the substitution presupposes that the commitment to build has been extended (BOI-ENR-DMTOI-10-40, § 490).

Does a substitution reset the construction period to zero?

It depends on the route taken. Two routes lead from the commitment to resell to the commitment to build, and they do not have the same effect on the timetable. A statutory substitution (French Tax Code, art. 1594-0 G, A, II), made by declaration sent by registered letter with acknowledgement of receipt (Annex III, art. 266 bis, V), causes the four-year period to run from the date the substitution is given: the commitment to resell is deemed to have been performed, but the land registration tax of 0.715% already paid remains acquired by the Treasury (BOI-ENR-DMTOI-10-50, § 100). The supplementary deed, a route accepted by administrative doctrine (BOI-ENR-DMTOI-10-40, § 270) and whose deadline was fixed by the Court of Cassation (Cass. com., 13 décembre 2011, n° 11-11.951: before the expiry of the resale period), is deemed to have been given in the deed of acquisition: the four-year period runs from the initial acquisition, and the land registration tax paid may be refunded within the claim period of article R* 196-1 of the French Book of Tax Procedures (BOI-ENR-DMTOI-10-40, § 270). The trade-off is therefore chronological: on a recent acquisition, the supplementary deed makes it possible to recover the duties; on an acquisition approaching its five-year deadline, only a statutory substitution opens a usable period.

Can a substitution cover only part of the property?

Yes, for the switch to the commitment to build: administrative doctrine accepts a substitution on a fraction of the property (BOI-ENR-DMTOI-10-50, § 100), the duties being computed pro rata to the value concerned. Towards the resale, no provision expressly allows for it; the supplementary deed merely states the value of the acquisition for which the regime of article 1115 is sought (Annex III, art. 266 bis, VI). This is the pattern of mixed transactions: building on part of the land and reselling the rest.

What form must the declaration take?

A registered letter with acknowledgement of receipt to the tax authorities, stating the date and the registration and publication number of the deed containing the commitment to resell, the purpose and scope of the works planned, and the amount of the duties whose exemption is conditional on those works being carried out (Annex III to the French Tax Code, art. 266 bis, V); for the switch to the resale, a registered supplementary deed (art. 266 bis, VI). Defective formalities weaken the entire transaction.

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The information on this page is provided for documentary purposes and does not constitute legal or tax advice. Law stated as at July 2026.