In France, the VAT equivalent is called TVA. Why refund the TVA? Well, the French government has encouraged developers to build ‘Residence de Tourisme’ developments by refunding the TVA.
By allowing your property to be let for all year-round rentals, French tourism benefits and the French economy improves! This only applies to new build properties, however if a property has been renovated or refurbished then you would still receive a smaller TVA rebate however it will be less than the normal 19.6%. Properties in Corsica which are exempt from this scheme.
When do I receive the VAT?
It depends on the French leaseback company. Unfortunately, each have their own rules. One major leaseback company does not even charge the TVA element, they apply for the refund themselves, so when you sign the title deed you only pay the ex VAT price. On the other hand another company takes six months, and others a year or more! Make sure you find out before signing a contract. On average it tends to be around 3-4 months after completion.
Latest TVA changes
There has been recent clarification of a new French law regarding VAT and leasebacks. Upon the sale of a leaseback property, owners now no longer have to repay the VAT pro rate temporis as long as the new buyer continues with the lease agreement and the leaseback has been held for 5 years – the new buyer does not therefore have VAT to pay either. Please check the latest on TVA at the time of purchase.