VAT on "Free" Weeks

5 posts / 0 new
Last post
VAT on "Free" Weeks

Hi I have recently bought a property from MGM (if I had read this site first, I wouldn't have!).  I am just about to receive my first payment for the property.  MGM are saying that I must pay a notional VAT on my "free" weeks which will be deducted from my rent. They are saying while I do not pay anything for these weeks as part of the leaseback agreement, they have to declare a notional rent to the French government and pay VAT and they are passing the VAT onto me.  Can anybody let me know if their leasing companies do the same.  It seems highly dubious.

loatie (not verified)

Yes, I'm afraid you do have to pay this charge.  Apparently, after lengthy negotiations when it first came to light in our MGM development, we discovered there is no such thing as 'free' occupancy in France.  It simply doesn't exist - the weeks we were told were 'free' are in fact a taxable benefit in kind in France.

 

OK thanks.  And I assume the daily tourist tax I pay when I am there is French Law too.  Interestingly my experience with MGM has been good so far but having read this site I am just waiting for the first problems to occur.  I guess I should just think positively and enjoy it!  What has your experience with MGM been like?

As an owner, you are not liable to tourist tax, I understand.

loatie (not verified)

Agreed re tourist tax.  Again, we were initially asked to pay it but then after negotiations with the Mairie it was retracted.  The argument was how can we be classed as owners for some taxes but tourists for others?  Can't have it both ways and for once we won!  it's very important to have a pro-active owners syndicate to deal with these matters on owner's behalves. Where is your development?

As far as being an owner with MGM/CGH our experience has been largely positive.  MGM create high end developments and we've very much enjoyed our time in our apartment.  CGH have managed it well and we have a close relationship with the residence manager.  We've benefitted from the exchanges and off season stays and made the most from being an owner.  

Yes, there have been issues with unexpected taxes and invoices along the way but I suspect that most owners of foreign properties have hassles from time to time.  The upside is that we have not had to worry about maintaining the property - all maintenance issues have been dealt with promptly and efficiently from changing the odd plate or light bulb to dealing with a damp patch on one wall.  Nor have we had to worry about increased charges as these, as promised,  have remained constant throughout the lease period.

We certainly haven't had to contend with some of the horrendous situations others have faced. As far as i know, CGH have paid rents promptly - We don't actually receive any rental income as we opted for maximum weeks useage and a discount from the purchase price at the start but I haven't heard any complaints from fellow owners.

The biggest issue for us is what will happen at the end of our 11 year lease period.  We were promised at the start that we would seamlessly be able to transfer to 'full' ownership but it is clear now that this will not be the case.  However, that's another story!  As far as your question is concerned, if we were buying into an MGM development now, fully aware of the facts of Leaseback ownership - which I'm sure you are - it has worked pretty much exactly as it said it would and there have been plenty of benefits.

You must sign up or login to access more forums.