5.5% or 19.6% ?

[Suninfrance]

If I am having a trench dug for some pipework to connect my house to the main sewers, what would be the TVA rate and why?

Jan

[Nick Trollope]

5.5%. Why? Because that is what it is! Why not 19.6%? Because the building is a residence (or 50% or more is) and you own it or rent it. Is that not the case?

[Suninfrance]

So you are telling me that the TVA should be charged at 5.5%?

Is there a difference in the rate of TVA to be charged for work that will remain a permanent fixture (eg. fosse, pipework, extensions, etc) and stuff that can be removed (eg. hand made furniture, wooden shutters).

Just asking because I know of someone who charges all his work whether it's permanent or removable at 19.6% which I think is wrong.  It's all very confusing and I would like to know for sure what the rules are, so next time I receive a Devis, I know exactly what I am paying for.

Jan

[Panda]

Hi

It's a bit more complicated than that I'm afraid, as I understand it, to get a rate of 5.5% it must be for renovation work to a habitation older than X number of years.  I can;t really see how your furniture scenario fits in here, perhaps if it is permanent furniture replacing something that was already there (ktichen units for example), it's a bit of a grey area I would say so I can imagine the artisan might err toward charging the full rate.  We need an artisan to comment on this I feel...

Panda

[Suninfrance]

It does seem to be a grey area.  Any artisans out there want to comment?

Jan

[whitey]

Hi,

my understanding is the same..........after speaking to the plasterer it's 5.5% for "renovation" work on an old property (my experience is artisan decision though!!) and the higher rate for other works for newer property.....not sure what the age limits are though. good luck!!

[Clair]

Things have changed a bit (tighter restrictions) since the decree of 10/08/2006.

I suspect most artisans do not have time to read through the newer regulations and try their best when they quote for a job. It is really down to the owner to look into it and make sure he pays the right rate, as at the end of the day, he is the person who will be held liable by the authorities. [:(]

[Blanche Neige]

"It's a bit more complicated than that I'm afraid, as I understand it, to get a rate of 5.5% it must be for renovation work to a habitation older than X number of years. "                 X years = 2[:)]   There has been a lot of discussion about this T.V.A. business in the past and I am sure that sooner or later an artisan will post with correct answer.

[Nick Trollope]

I thought I already did.....

TVA on all work by an Artisan on property is at 5.5%, except when;

The property is not habitation, or less than 2 years old, the bit of the property worked upon is less than 50% of the whole (such as a commercial site with a small dwelling inside), the work is on new build (such as an extension) or the works are major (a total rebuild), the property was previously used as a dwelling (ie. not barn conversions) and not where the client is not the renter or owner of the property (ie. all subcontracted work is at 19.6% to the contractor).

A fitted kitchen in an existing room (or a replacement fitted kitchen) would be 5.5%. A new bathroom, where one did not exist before would be 5.5%, unless you built an extension to house it.....

OK, so there is confusion (ahem...), but the importantant thing (for the Artisan - and let's face it, we are gonna try to screw you whichever way we can) is to get the client to sign an attestation stating that they (the client & the property) meet the criteria for the reduced rate of TVA, including a clause that says that the client will pay the difference if  the TVA is calculated incorrectly - oh yes, it is also a legal requirement...

[Coco]

Both the guy that does groundworks for us and the mason we use (who have both been on courses to bring them right up to date on TVA rates) would beg to differ with Nick slightly.  They would say that if the trench being dug is to house replacement pipes for old ones to the mains, then it would be at 5.5% because it is renovation.  To dig a trench to make a new link to the mains then it would be at 19.6%. Same as our roofer charged 5.5% for putting a new window in an existing dormer but charged 19.6% for creating a new dormer in the extension to our house.

[meboul]

I own my house for 6 yrs and it was built in 1930's - we are having the outside redone by a mason - it is a maison secondaire - it this a factor in the rate of TVA - he has charged us 19.6% but all other artisans up to this have charged 5.5% - we dont rent it out and do spend a lot of time there - any ideas ?

[BJSLIV]

It doesn't matter whether its a secondaire, or how long you have owned it. Work on a house that is over two years old is at 5.5%. So a new connection to the main sewerage or replacing the crepi should both be at 5.5%. In simple terms you only get charged the full rate if its a luxury item , a pool for example, or if you are increasing the size of the property.

 

[cadas]

The 5.5% issue is a bit more complicated now.  The last set of documents and attestations that my accountant sent out give a long series of criteria in order to benefit from 5.5%. 

The forms appear to be trying to reinforce the point that 5.5% is for repair not renovation, the main disclaimers included:

- not affecting foundations or structure

- not involving more than five or six second fix elements.

- not involving new construction or increasing the habitable area by more than 10%.

Moveable furniture is excluded but fixed items, such as a kitchen are allowed. 

One area of greyness we do have is the issue of proportion, they guidance notes seem to indicate for certain items, such as windows, replacing all windows in a house is renovation, whereas replacing a proportion is repair; one form asks you to justify the 'repair' and asks for the proportion of windows being replaced in number or area.

What this all means is that it is rather complicated and especially when you are dealing with modernising second homes as much of the work being carried out is renovation, hence why many artisans charge 19.6% for simplicity.

[Nick Trollope]

Quite so - I think that is what I said above!

To reinforce BJ's reply to meboul (and to reply to his PM to me) - 5,5% - without the shadow of a doubt!

Cadas is right in saying that Artisans often charge 19.6% for simplicity. However, they often do it because they don't understand the rules (Coco, I'd guess your man comes into this category, I'm afraid) - or they can fiddle the difference - one facture for the client, one for the TVA... Surely not?

They also run the risk of having to refund the client, then reclaim from the Hotel des Impots - never an easy task!

Always make sure your Artisan is charging you the correct rate. The Hotel des Impots will give you a definitive answer (you must insist on it in writing).

 

[montagrier]

I believe also that if the work done effects greater than 50% of the house 19.6% is charged....no matter what the age of the house is.

We are just starting a renovation to a 30year old house and every single room will be renovated and every window and door and shutter changed. There is no planning permission needed, no new openings...we have been instructed by our acountants that the higher rate must apply because it will effect the whole house.

This is a new one on me....you learn something every 27 seconds....ohhh I never knew that!!! there you go again!

monti

[Frank]

Hi All

I have just read this thread and I am slightly confused (it doesn't take much these days I think its all the vino calapso!!) 

Just a little history to give you the picture!!

I have just had a chap round to do a devis for the windows for phase two of our renovations.  We have a permis constuire and the CdeU to change the use of the school to habitation. Now I mentioned to the chap about tva at 5.5% and I got the shrug and shake of head to say no!! In my limited french I explained that I thought tva for artisan to complete etc is 5.5% and for me to do ie ready mades from a brico etc it would be 19.6%.  He then asked me how long I had owned the property, did we have permis constuire and providing the windows didn't exceed 70% of the building value, then maybe we could get 5.5%.  So I, in my best french, babbled on about the numerous meetings in 2005/6 to keep the TVA at 5.5 for renovations (I think I confused him!) and that as far as I knew, it would be 5.5%.  So for clarification, for replacement windows for an old school, over 100yrs old, they are extremely large (2.5m*2.5m) and going to be toughened armoured type glass as we can't have volets, what is the TVA to be charged.  Is it 5.5% or 19.6% or does anyone know of a site where I can get the info, obviously for us the difference will be vast!! All other works will be carried out by us and not artisans if this helps!  Any advice greatly received

Many thanks in advance

Kimberly 17

 

[BJSLIV]

Your use of the phrase "phase two" is the key element.

Has the work on phase one been completed, and notified to the authorities, so that the house could have been lived in for at least two years?

If that is the case you could qualify for the replacement of the windows as maintenance to an existing house.

If you are still converting the school and the building has never been completed as a house, then tax will be due at 19.6%. The lower rate only applies to existing houses never to conversions.

 

 

[Frank]

Hi BJSLIV

Thanks for your reply, just to clarify, its us who have named it phase two, it is all part of the original permis construire to convert/renovate the school and houses and put a pool in ( we had an architect draw up the plans and submit the papers etc) the impots have been notified only for the completion of the houses for habitation tax purposes.  If it is gonna be 19.6% then boy is it gonna hurt!!!!  We can't even do it ourselves as the aspect has to remain exactly the same and you can't buy ready made 2.5m *2.5m windows in toughened armour plated type glass!!!.  Thanks again

Kimberly 17

[Nick Trollope]

I don't know where 70% of value comes from, complete rubbish, I'd say.

But, as you have been advised, everything on your property will be at 19.6%, because it was not a house before you started.

[Val_2]

I second Nick with his replies. Now the official attestations which have to be signed and completed by the householder have much more information required to be confirmed on them and have a final statement saying if there is an error inthe rate of TVA charged, they will be liable for the difference and not the builder. I might be putting this to the test shortly as we are having probs with a difficult client who has shot himself in the foot by writing to us and amongst his ramblings has stated he will be using his newly modernised house to relocate his established business office there to save himself rent in the nearby town and we have charged at 5,5% as the house was for him to live in complete with all new bathroom,bedrooms and kitchen etc plus a home cinema room. I will let you know if anything happens as we are using this as a lever to get our payment or we will report him and we have been advised by a professional person too.He is a not British by the way in case anyone thinks I am brit bashing.

[MicAni]

That's interesting Coco, we had new dormer windows fitted in our granary last month which were not a replacement and our builder charged us 5.5%. Maybe the difference was that yours was an extension and our wasn't...I'm not sure..

[lmc]

Hi,

I just found this thread so sorry it's so many months later.  I work for a French chartered accountant and I've just translated the latest regs on this into English so I'm pretty sure about it all.

Nick is pretty much right in what he has said.  However, work to a facade (new crepi or exposing the stones for example) will always be charged at 19.6% rather than 5.5% even if the building is 500 years old because it counts as cosmetic work which doesn't qualify for the reduced rate.

The reason why artisans will sometimes ask how long you have been there or what other work has recently been done is because qualifying for the reduced rate of VAT is dependent on the size of the project (are you effectively creating a "new" house even if you are splitting the work up over a long period?) and the size of the project is measured over the previous two years but also over the following two years (can you believe it?).  Therefore, if there is clearly still an awful lot of work to do to finish the place then they are liable to decide that in fact 19.6% should be charged even if it is a job that would ordinarily qualify as 5.5%.

An example is replacing an old bathroom - 5.5%, right?  But if you are turning the place into a 6 bed property then you will certainly be fitting more than one bathroom eventually - more like 3 or 4.  In this case you are effectively creating a new system of sanitation so later bathrooms should be 19.6% even if the first one isn't.

Hope that's a bit clearer.

Lisa

[mint]

Hell's bells, Lisa.  Will bear all this in mind as we house hunt.  If the exterior is crappy (or crepi) and looking tatty, then a definite lower offer is in order, methinks!

Thanks for posting.

[TroisChatNoir]

this whole area seems to be a can of worms!

I have just been challenged on TVA by a client who seems to know a lot about this as he is a european corporate accountant, his statement to me and one to which my french accountant has agreed to investigate is as follows; it doesn't matter how old the property is or whether its renovation work as long as it's labour intensive and involves supply of materials and crucially its not a new build,  I dont' suppose the Hotel D'Impots will complain as we seem to be handing them too much money every trimester.

You buy 1,000 euro of materials from the builders Merchants

They add vat @ 19.6%

You get an invoice

 1000.00 materials

   196.00 TVA @ 19.6%

 1196.00 Total to pay

You claim back 196.00 euro on your VAT return

---------------------------------------------------------------------

You carry out work for the client

You invoice them as follows

3,000.00 Labour

1,000.00 Materials

4,000.00 Net

   220.00 TVA @ 5.5%

4,220.00 TOTAL

You add the 220 Euro to your VAT return

You pay the TVA a net total of 24 euro's (220-196)

it seems to be working for me at the moment and this is how it was explained to us on the new business course (etage) run by the chamber de metiers in Gueret. when you also add into the equation TVA from running costs such as fuel/vehicles/telephones/etc you may find that the hotel d impots owes you money not the other way round ......

[Chancer]

An excellent and incisive posting 3 black cat (non plural!)

Keeps the fonctionaires in work though!

I can really see why fonctionaires are regarded with reverance and jealousy (I have just discovered that my girlfriend gets 9 weeks paid holiday - nice work if you can get it[:)])  and the self employed viewed as mentally retarded[:D]