Vat payback

Hi,

I have experience of paying it back...I can't help with all your queries but will tell you what I know..

In my case Odalys elected not to extend the lease after a minority accepted theor reduced rent offer. this was in 2014

They left in Sept 14 and I got the key back to the apartment at that stage and manage it myself now. 

It took the local tax authorities 2/3 years to come looking for the VAT... But when they did they tracked down everyone in the complex and sent a bill for a percentage

We had just ended a 9 year lease so they (tax people ) came looking for 11/20 of the original amount... Because they were slow and not through any fault of mine they added penalties interest. (say 2.5K on a 10K debt)

Technically. it is your responsibilty to tell them you have exited the lease "ignorance is no excuse and all that"

I got my accountant to argue this and eventually they relented and waived about 50% of the penalties

I had been expecting this all along and had saved some of the income from Odalys so it wasnt a huge shock when it happened.

If you have an accountant they may be able to negotiate a period of time for the repayment.. I have heard of people getting 1/2 years to pay it back but I didnt get this,

In the end I was happy to suck it up for the freedom from Odalys and SGIT and the chance to do what I wanted with the apartment

Ultimatel,y the success or failure of your leaseback depends on whether there is a market to rent it when the management company exit. If there isn't you are in big trouble and you may as well cut your losses and get out as quick as you can.

If there is either a local ong term rental market or a short term holiday let market you can just about break even. But beware of the increased pressure on AIRBNB etc. to share data

The biggest risk to any future profits is not always the leaseback VAT repayment but more likely the repairs, renovations and other jobs required after 9/10 years of neglect by Odalys's puppets SGIT who for example voted against a sinking fund every year... and held off all renovations and repairs until after the 9 years.

For example just something simple like painting an apartment complex on the exterior (paint, ironwork, woodwork) could easily cost 5K per partment. Replacing the furniture which will be pretty worn after 10 years will cost another 5K and getting service slike Internet cabling, Post boxes, sprinklers, electric gates swimming pool maintenance will take another whack every year.

hope this helps a little

Woody

Woody, all,

Worth checking through old threads and Seamus's comments.If your lease is broken and you either take theproperty back and use solely for private use and/or a few ad hoc rentals or sell it then yes, proportionate TVA is repayable. However, if you continue to let it chrge TVA on the rental (which the French authorities benefit from) AND offer three out of four letting services e.g. handover/key service, linen change, cleaning then, there is absolutely no obligation to repay any VAT.  Doing this also gives you more flexibility on personal usage than the contractual restriction under a lease with a mangement co like Odalys but, if your property is in a sunny/holiday type location e.g. Cote d'azur then the best months for usage are also the best months for rent.  If you do use your apartment regularly then probaably best to book it through your own system to maintain an appearance of commercialism.

Hi, interested in this thread and anyone else's experience of not having to pay back or being asked to pay back the VAT. Our property was in leaseback with PV for 9 years. At the time when we expected a renewal of the lease PV pulled out of the complex totally. They did not pay the owners any indemnity! They did offer an annual rental agreement with their sister company Maeva.com. During this period we were told that we would not have to pay back the VAT as Maeva would meet all the parahotel requirements. Meanwhile we got our keys and were able to have more usage of the appartment ourselves so this suited us too. Unfortunately despite giving Maeva at least 18 weeks to rent out the appartment, we only got 2 weeks rental. Some owners didn't get any. We've all had to pay the service charges , insurance and any interior renovation to our appartments (although these were not obligatory but to a certain standard). Many owners are now looking to sign up to a new leaseback arrangement with a different operator. If the operator gets 50 owners signed up, then it will go ahead. This operator will also offer a rental contract similar to Maeva to those who do not want to commit to the 9 year lease. However they told me that this type of contract, despite offering the parahotel services, will not mean that the VAT does not have to be paid back and we would probably have to reimburse the French government. Is this really the case or are they trying to get us to sign a leaseback? It looks as if the new operator may well get enough owners signed up but not ourselves.

We are still signed up with Maeva but do not think they can operate on the same site as a new company and presumably they would have to have the same number of owners signed up to them?

our other choice might be to find a local agent who can offer all the letting arrangements or simply pay back the VAT and hopefully be able to do this over a 3 year period as I've seen described in other threads.

would be interest to hear of anyone else's recent experience of this.

our residence is in Brittany.

David Sabatier

1862 Law Office – 01 53 00 22 22

Dear All,

In principle, furnished rentals are exempt from VAT.

However, VAT applies (except for non-profit associations) in the following cases:

1.   The classified tourist hotels;

2. classified or approved holiday villages;

3. classified tourist residences when the lease with the operator lasts at least 9 years and the operator has made a commitment to promote tourism abroad. The owner can also fall into this category if he has made a commitment to promote tourism abroad;

4.  The provision of a furnished room provided that the operator (or an agent) offers, under conditions similar to those offered by professional hotel establishments, at least three of the following services:

- breakfast,

- regular cleaning of the premises,

- the supply of household linen and the reception, even non-personalized, of customers.

5. bare or furnished leases granted to an operator of an establishment that falls within one of the four categories listed above.

Consequently, if an individual who rents furnished accommodation without offering the above-mentioned similar services, then he is not subject to VAT unless the rental is in a classified tourist residence.

Kind regards,

David Sabatier

1862 Law Office – 01 53 00 22 22

Important : We revert to you in the framework of our partnership between our firm and the owner of the website frencheleaseback.net. However, this answer does not constitute a lawyer / client relationship and the firm or the author cannot be held liable for the recommendations which are made as we did not review your lease and your personal situation.   

Thank You David,

does your last reply just apply to the 10% tourist TVA charged on rental income or has it an implication of TVA payable if owmer sells without a bail-commercial?

My question is as follows:

In our resort there are 2 resorts sharing 1 reception. "Resisence de Tourisme" registration has lapsed due to numbers of bail-commercial with main-operator in the combined resorts < 70%.

Howeveer some owners sign bail-interessements each year so the 70% requirement for tax purposes is being met but resort is not registered with www.snrt.fr (Syndical National Residence de Toutisme).

If any owner who signed yearly bail-interessement finds a buyer they can wait until bail-interessement has expired and then sell with no bail-commercial attached to apartmemt.
Is TVA payable in that scenario?

Bien Cordialement