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TVA 5.5% ??????


JJ
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Can anyone enlighten me as to whether or not the 5.5.% rate of TVA for renovations is still to exist on or after 01/01/06.

Each year there is talk of this rate being abolished, and 2006 was supposed to be that year (again).

Everybody I talk to seems to have a different opinion.

Many thanks.

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The lower rate of 5.5% is currently still under review after no agreement was made by the 25 member states at the last ECOFIN meeting in Brussels.

There is another meeting which will take place on the 24th January under the presidency of the Austrians, where the final decision is due to be made. In truth, noboby actually knows what is going to happen but for now the rate remains at 5.5% until then. Germany is one of the countries that are against the French keeping the lower rate and may well vote against France again.

People have been mistaken into thinking that if they sign a Devis before the rate changes then they will not be liable for the higher rate if it changes, but the FACTS are that the rate of TVA will be applicable at the date of the facture, and factures cannot be backdated, as this will be taken as fraud.

There are a few possibilities that may happen; The rate continues at 5.5% . The rate reverts back to 19.6% . The rate reverts back to a mid way position - say 12% . Or The rate reverts back to 19.6% but the French ignore it (like many EU directives) and pay their fines to the EU coffers!

Paul

Mayenne Renovations (53)

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Thank you Paul, very useful and informative. Especially as on "Total France" is the wrong information and I was just going to share it with this Forum!! 

I think after the French succeeded in keeping their farming subsidies (inspite of all the "fighting" talk of Tony Blair and Co.) I think you are right in thinking that the French will hang on to the 5,5 % TVA inspite of protests of member states and just pay the fines.  

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Not sure that the govt will have the same protective attitude to the building trade as the farmers - in France the subsidies to farmers are seen as payment for looking after the 'patrimoine' (that's a good joke - you should see the amount of spraying that goes on on the farms near here, God help the wildlife).  The builders around here all fear the worst ....
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"the builders around here all fear the worst".....  yes and around here too, us included. We have had potential clients on the phone offering us the full payment now ahead of any work just in case but we have refused because we have to explain all payments into the bank as to where they have come from and I don't think the tax man will be too pleased to find he has been losing out on income due.

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Just been discussing this with my accountant - he seems to think it will stay at 5.5% but has no more information than we do. There is a strong possibility that the French goverment will override or ignore any European ruling.

The thing my accountant pointed out is that during the 5 years or so of 5.5% TVA since the Euro was introduced building rates and material costs have gone up by 30 to 40% - far outstripping any savings made on TVA.

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[quote user="Val_2"]

"the builders around here all fear the worst".....  yes and around here too, us included. We have had potential clients on the phone offering us the full payment now ahead of any work just in case but we have refused because we have to explain all payments into the bank as to where they have come from and I don't think the tax man will be too pleased to find he has been losing out on income due.

[/quote]

We are paying on account to our project manager (which by now is 88 % but only about 60% of the work being done). What would our position be?

And do you think Val, that due to this threat of the TVA going up, we are finding that our build/renovation is so slow, because the builders have so much work prior to it?

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  • 5 weeks later...

Yep it's official! The lower rate has finally been agreed to be continued up until 2010.

Here is a (rather naff) BabelFish  translation from Bati Actu which gives the general gist of the decision;

VAT to 5,5 %: it is in the pocket! The European Union (EU) and Poland arrived Wednesday evening to Vienna to an agreement on the VAT to reduced rate. The device of VAT to 5,5 % in the maintenance-restoration in France east thus renewed until 2010. A victory for the whole of the professionals of the building. End of suspense! After a meeting with the Minister for Finance Polish, Zyta Gilowska, and the European police chief in the Taxation, Laszlo Kovacs, Poland finally raised his opposition to the European agreement on the reduced rates of VAT, already voted by the 24 other members of the European Union the week last "It is a victory for Europe", exclaimed the Austrian Minister for Finances Karl-Heinz Grasser. Publicity "These is a balanced compromise, which offers a legal stability for the Union and of the reliable guarantee to certain significant economic sectors (...)Cette solution will bring advantages to all the Member States", declared Laszlo Kovacs. Let us recall that Poland wished that the prolongation of a VAT reduced on constructions of new residences, which the other Member States refused to him. Because in its Treaty of Accession to the EU, this one had obtained this exemption well, but only until 2007.Le problem can from now on be solved by the exemptions existing for the construction of residences in social matter. "a defeat of the moonlighting" At the professionals of the building, environment was with the festival Wednesday evening... or at least with the relief! Contacted Wednesday evening by the drafting of Batiactu, the president of the French Federation of building (FFB) Christian Baffy stated that it acted above all of "the victory of Europe" but also "of a great victory for France and the government which always supported us in this measurement". "We also make a point of greeting the formidable team spirit of the 22 countries which voted for this measurement on January 24, as well as the very great mind of solidarity of Poland, the Czech Republic and Cyprus". Before adding: "It is a victory also of employment, consumers, our companies... and a defeat of the moonlighting". On its side Jean Lardin, president of Capeb, declared: "the CAPEB is pleased with this victory which was made possible by the exemplary behavior to France of the professionals of the building throughout the experimentation of this measurement, in particular, through the fall of the prices for the consumers and the development of employment". And to recall: "In France, one needed a mobilization seldom observed of the heads of artisanal undertakings, which gave a support without fault to the action of France". This last in addition was pleased with "the legibility, which we gained with this extension by 5 years, which should not make us forget that, as of today, the objective of the sector is the final perpetuation of measurement". But by then, the craftsmen can blow... finally!

 

Great News for all us artisans and our clients too!!!!

 

Paul Punchard

Mayenne Renovations (53)

 

 

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