Reduced TVA for renovation projects

[Peekaboo]

My brother is about to purchase a ferme alpage and have the renovation work project managed by a local architect.  The architect has experience of working with French nationals and has informed us that TVA is reduced to 5% for renovations such as this but is not clear if this is true for people buying a second home and not living in France.  Can anyone answer this question for me?

[Le Plombier]

I do a lot of work for Brits with second homes and there is no problem on the TVA

You have to be careful with the extent of the renovation, if it is a complete makeover you run the risk of the work being classified as new build and you will pay the full TVA

Le Plombier

[Sunday Driver]

The VAT certificate that you sign to qualify for the reduced rate only asks if you are the owner of the property.  No questions asked about whether it's a second home, etc.

 

[Nick Trollope]

It isn't as simple as that. The rules are very complex and as M Le Plombier alludes to, if the "renovation" is to more than 50% of the building (or if it is not habiatation at the moment), then the TVA is at 19.6% (otherwise 5.5%).

The final arbiters will be the Hotel des Impots - if he shows them plans they will give him an accurate assement.

[Val_2]

The government attestations you have to give the clients now list the actual works involved and actually how much of each one qualifies until the higher rate kicks in. You need to get it in writing from the Impôts regarding your particular project and the works involved because at the end of the day it is the householder who will be coughing up the difference should they decide to investigate as you will have declared all this info on the attestation and signed it.

[Nick Trollope]

Val, I am a little confused about these "government attestations" that you have mentioned on a couple of occasions. We (my accountant & I) have checked with my local centre des impots and they deny the existance of a pro-forma. I just use a form of words originally supplied by the impots.

Have you got a link? Or a source?

[Punch]

[quote user="Nick Trollope"]Val, I am a little confused about these "government attestations" that you have mentioned on a couple of occasions. We (my accountant & I) have checked with my local centre des impots and they deny the existance of a pro-forma. I just use a form of words originally supplied by the impots.

Have you got a link? Or a source?


[/quote]

 

Nick,

Val is correct, you really should be using the (2) new government attestations . This link takes you to the page:- scroll down to the bottom and click on one of the two blue lines . Sorry not sure how to shorten links!

For my customers I use mainly the simplified one, for major renovations you need the "normale " Each attestion has an information page attached.

http://www.impots.gouv.fr/portal/dgi/public;jsessionid=GNZT2I2BCH1I1QFIEMQCFFOAVARXAIV1?paf_dm=popup&paf_gm=content&paf_gear_id=500018&typePage=cpr02&docOid=documentstandard_4831&espId=-1&temNvlPopUp=true

Paul

 

[Val_2]

As Paul says there there are two versions depending onthe works involved and our accountant forwarded a main copy of each one,which has a rear printed page too explaining all the details required and regulations now and we just print off copies when required to send out to clients.They are government headed with reference details. It gives the artisan more protection now in cases of wrong rate charged and who pays the difference.

[Nick Trollope]

Thanks both.

It certainly pays to keep up with the government. When did these come into force?

[Val_2]

Well we received our copies back in July time from what I remember and started to use them straightaway. Our accountant is part of a gestion d'agrée who specialises in the building trades whereas perhaps just an ordinary accountant/bookeeper might not have any idea about this new paperwork. Nick, if you want to pm me with your address I can forward a photocopy of each one for you to then copy and use yourself.

[Punch]

[quote user="Nick Trollope"]Thanks both.

It certainly pays to keep up with the government. When did these come into force?

[/quote]

I think they came in around Febuary just after the 5.5% rate of TVA was extended to 2010 . CAPEB our trade organisation sent us copies and then gave us the link to the gov; website  that I posted for you . No need to get a photocopy, just save the PDF file to your PC and you will always have a copy ready to print off on your PC. In fact if my clients have email , I just attach the form as an attachment and then they can print it off  - saves trees too!

 

Paul.

http://www.punchardrenovation.com

 

[Kernow]

Hi,

I have just purchased a house in Brittany. It is a habitable house, but needs new windows/doors, floorboards, bathroom (only a toilet at the mo), kitchen (only a sink present), rewiring, plumbing improved / repaired, new studwork, repointing, and an extra opening for a door and two windows (planning already submitted to Mairie). The house has a couple of electric panel heaters and two chimnies (woodburner to be used in one). The house is about 100 yrs old. I think I am entitled to claim the lower TVA. Please correct me if I am wrong.

What is the process for getting the 5.5% TVA used by a builder. Do I just complete the Attestation Specifiee, tell the artisan that I am entitled to the lower TVA (and provide him with a copy), he then purchases materials (after quoting 5.5% on the Devis)?

When going to a builders merchants, would they just sell the materials at 5.5% to the artisan, based on the artisan stating that the materials are to be used on a project that qualifies for the lower TVA rate?

Any advice would be really appreciated.

Thanks, Marcus

[Le Plombier]

When I quote for work it is normally clear if the 5.5% rate applies

On occaisions when it is not clear I generally ask the client to visit the Impots and get a ruling on the TVA rate

Where 5.5% TVA applies I pay the full 19.6% when I purchase materials and then claim back the difference in the rate via my TVA returns to the Impots. There is no way you can purchase material from suppliers at 5.5% and you can only recover the difference if you are registered for TVA

Le Plombier

[nectarine]

Just getting back to the original question.  All of the tradesmen who did work at our holiday home charged us 5% VAT, as it is to do with the age of the house but I don't know what the qualifying period is.  So all new plumbing, electrics etc., had the reduced charge on it.  The tradesmen would send us the bill, plus a form to sign and return in which we confirmed that the house and its works qualified for this reduced rate of 5%.  So it is nothing to do with whether it is a holiday home or not, but the age of the property. 

And, when we sold the house, the notaire examined all the bills and confirmed everything was in order, and all these bills served to reduce the profit that we had made on the house and therefore the capital gains tax that we eventually had to pay.  Our notaire was extremely helpful in sorting through the bills and telling us which ones would offset the tax.  So, good advice, keep the bills in case you sell in the future!

[Russethouse]

Wasn't the OPs question to do with whether the status of the owner informs the VAT rate ? It seems to me it doesn't, it is the category of the work that is key, if the architect knows his way around the VAT rules (as sounds likely) then he is familiar with what does and does not count for the 5% rate ?

[Kernow]

Thanks very much for the reply.

So all artisans must pay the full 19.6% TVA when purchasing materials, charge the client 5.5%TVA and then (the artisan) claims the difference back, you say 'if registered for TVA'.

Are some builders not registered for TVA and therefore can only charge a client the full 19.6% on materials, but not labour? Is this how it works with some artisans, particularly with a single, self employed artisan?

 

[LesFlamands]

If an Artisan is trading as a micro entreprise he is not TVA registered. This will mean that he will include materials he supplies to you at the TTC price (19.6%) plus his margin but he won't charge TVA at all on his labour. Having said that, most micro entreprises need to keep their turnover down and, therefore, may ask you to supply the materials so they don't appear on the invoice - which is no good for you if you want to offset cost of building works against CGT when you sell.

It's generally better to use a TVA registered business and benefit from TVA at 5.5% on both materials and labour when you can.

[Le Plombier]

If the property is more than two years old it qualifies for the 5.5% rate provided the type of work is listed for the lower rate

Generally such things as electrics, plumbing,heating and building alterations qualify but items such as swimming pools do not.

In addition to reduced TVA there are grants for various energy efficient installations but it is much easier to recover the grant if you are resident and registered for income tax in France

There is a problem with extensive and major renovations because this type of work could possibly be classified as new build by the Impots and the 19.6% rate will apply to some or all of the work. Where I quote for work of this nature I point out the possible problem to the client and request that he or his agent clarify the point with the Impots

If there is any doubt I will only quote based on the higher rate

Note that completion of the attestation for 5.5% does not let you off the hook, you will be responsible for paying the difference if the Impots rule on 19.6% at a later date. The contractor may have a problem with the Impots over the issue but it is you that will pay

According to my French accountant the lastest form of TVA attestation should be used by contractors as it affords them better protection in the event of any problems

Le Plombier

[Kernow]

Thanks Charles and Le Plombier, you have clarified things perfectly - I now have a much better idea of the situation and options when dealing with artisans.

Your help is much appreciated, and what an excellent forum this site is.