Francois Ouairy

My practice is built on French VAT (TVA) and registration duties (droits d'enregistrement), and what makes it unusual is that we both structure transactions and litigate them. In France those two sides are normally handled by different lawyers: transactional practitioners who never appear before a court, and litigators who are brought in once the structure is already fixed. Doing both means the choices made at signature are made by the person who will have to defend them.

Most of our clients are French and foreign investment funds, real estate investors and international groups. The work is technical and highly confidential, often on financial instruments and the vehicles that hold them, which is why very little of it is ever published. Discretion and speed are what those clients come to us for.

I write the France chapter of the Chambers Indirect Tax Global Practice Guide, publish on real estate VAT in Defrénois and Lextenso, and contribute opinion pieces on tax policy to Le Monde and Les Échos. Bensaid Avocats has offices in Paris, Geneva, Marseille, Cannes and Lisbon.

Does short-term furnished letting remain subject to French VAT? Only if the operation is para-hotel in character. Article 261 D 4 b of the French tax code exempts furnished letting unless the operator provides at least three of four ancillary services, namely breakfast, regular cleaning of the premises, supply of household linen and reception of clients, and offers the accommodation for a period that may not exceed thirty nights. The Council of State decision of 12 November 2025, n. 498267, struck down the administrative guidance which treated the cleaning and linen criteria as automatically satisfied, on a short stay, by a service performed before the guest arrives. In many files the real stake is the clawback of input VAT already deducted on the works rather than the VAT on the rents.

What happens if an undertaking to build (engagement de construire) is not met? Article 1594-0 G grants the relief against an undertaking to build within four years. Article 1840 G ter then provides that the duties are recovered, together with the late-payment interest of article 1727, and the recovery is made only to the extent of the fraction of the works not completed. The period can be extended on request, and the Covid-19 emergency rules neutralised 12 March to 23 June 2020, so the first thing to check is how that affects the particular deadline.

When is a building treated as new for French VAT and transfer duties? Article 257 I-2-2 requires that the works have restored to new condition either the majority of the foundations, or the majority of the elements other than foundations which determine the resistance and rigidity of the structure, or the majority of the consistency of the facades excluding rendering, or at least two thirds of each of six second-fix trades: non-load-bearing floors, external joinery, internal partitions, plumbing, electrical installations and, in mainland France, the heating system. Any one of those limbs suffices, but its own threshold must be reached, and the second-fix test is applied trade by trade and not globally.

Can a foreign company be treated as having a permanent establishment in France for VAT? Yes, and the VAT consequences are often harsher than the corporate tax ones. Where the accounts are held to be insufficient the authority may reconstruct output VAT from recorded sales, and it will challenge input VAT whose substantive conditions are not evidenced, so the company risks being taxed on its turnover rather than on its margin.

Can input VAT be deducted before any taxable turnover has been generated? Yes. The right to deduct is governed by article 271; articles 256 and 256 A define the scope of VAT and the taxable person. What matters is that the person already acts as a taxable person, that the intention to carry on an economic activity is established by objective evidence, and that the expenditure is allocated to intended transactions which themselves carry a right to deduct.

Asset deal or share deal, which costs less on a French property acquisition? It depends on whether the transaction falls within the scope of VAT or of registration duties, and the two outcomes can differ by several points of the price. A building completed more than five years earlier is exempt from VAT under article 261 5-2 where it is supplied by a taxable person acting as such, and the seller may opt to tax under article 260 5 bis. The option to tax commercial leases, the allocation of the price between chattels and real estate, and the recovery of the acquisition VAT all have to be settled before signature, because none of them can be repaired afterwards.

What is an undertaking to resell under article 1115, and what if the resale does not happen? The reduced duty is granted against an undertaking to resell within five years, reduced to two years for certain sales by lots. If the resale does not take place the duty is recovered with interest. The position is not always lost: a construction undertaking can be substituted for the undertaking to resell before the period expires, and takes effect on the date it is given.

What are the French tax obligations of a non-resident holding French property through a company? The wealth tax on real estate reaches the French property through the chain of companies, in proportion to the share of the company's value which that property represents. Separately, the 3 per cent annual tax of articles 990 D and following is owed by the entities themselves, French or foreign, which hold the property directly or indirectly. Article 990 E provides a series of exemptions which turn on the nature of the entity, the listing of its shares, the weight of French real estate in its assets, its place of establishment, and in some cases an undertaking to disclose or an annual return.

A VAT test case on the reduced rate applicable to works of art, run for a practising artist. The tax authority denies the reduced rate on two grounds: that paintings conceived in three dimensions on a computer and then printed on aluminium panels, and sculptures cast from moulds produced abroad and finished by other hands, are not executed by the artist himself, and that the limit on the number of copies is exceeded.

The case is interesting because the statutory definition of a work of art was written for a studio economy, at a time when an artist held the brush from first stroke to last. Applied literally today it would exclude a large part of contemporary production, which routinely uses digital conception, foundries, printers and outside finishing. The outcome will reach far beyond this one artist.

It is also a good illustration of what the practice does: the question is a pure indirect-tax question, it is being argued before the tax authority and then the courts, and the answer will decide how an entire category of creators is taxed.

Indirect tax is unforgiving about timing. Most of what decides a file is settled before signature or within a statutory period, and once that moment has passed there is nothing left to argue. Whether a transaction falls within the scope of VAT or of registration duties, whether the option to tax has been exercised, whether an undertaking to build has been met within four years: none of these can be repaired afterwards. A corporate tax question can often be reopened. An indirect-tax question usually cannot.

The second difficulty is that the tests are mechanical but the evidence is not. Whether a building is new is assessed trade by trade against a two-thirds threshold, which sounds arithmetical until you have to prove, years later, what was actually demolished and what was kept. The same is true of the para-hotel services test: the law asks whether a service is effectively provided, and the answer lives in cleaning schedules and invoices rather than in the contract.

The third is that the law moves under the client's feet. The Council of State decision of 12 November 2025 on para-hotel services changed the position of every short-let operator in France overnight, including people who had structured their affairs correctly under the previous reading.