Last Updated on August 26, 2026
Many international investors are surprised to learn that foreigners can buy property in France with relatively few restrictions.
In certain cases, non-resident buyers may also be able to reclaim the 20% VAT charged on the purchase price, which can significantly improve overall returns.
This opportunity usually applies when purchasing new build developments, serviced residences, or commercial property investment assets that will be used for a VAT-taxable rental activity.
Understanding the French VAT rules before buying or selling property in France is essential, particularly if you intend to generate rental income.
PTI Returns regularly helps non-resident investors register for French VAT, submit returns, and reclaim VAT on qualifying property purchases.
VAT on New Build Houses in France: How It Works
In France, a 20% VAT rate can apply when you buy a new build property sold within five years of completion, as well as serviced or tourism residences used for rental purposes. This differs from most traditional resale properties, where VAT typically doesn’t apply at all.
If the property is placed into a qualifying rental scheme – such as a leaseback agreement or one offering hotel-style services – non-resident investors may be able to register for VAT and reclaim the amount paid on the purchase price, provided the property stays within the scheme for the required period.
When VAT Applies in France (New Builds, Serviced Residences and Commercial Property)
In most traditional property purchases, VAT does not apply. However, VAT becomes relevant in several situations, particularly where the property is treated as a commercial or tourism asset.
The France VAT tax rate is generally 20%, and it may apply when purchasing:
- new build property sold within five years of completion
- serviced or tourism residences
- some commercial property for rent
- property operated with hotel-style services
VAT for new builds
French tax law typically applies VAT for new builds when a property has not been previously occupied or is sold shortly after completion.
Investors who purchase qualifying developments and operate them as a rental business may be able to claim VAT on new build purchases. This is particularly common in tourism developments where properties are placed into managed rental schemes.
VAT on residential property rent
Standard long-term residential leases are generally exempt from VAT on residential property rent. However, VAT can apply if the rental activity includes hospitality-style services.
This may include services such as cleaning, linen replacement, reception services, or breakfast. These conditions are often present in serviced apartments or furnished apartment rental properties in France targeting short-term visitors.
PTI Returns helps investors structure their rental activity correctly so that VAT recovery remains compliant with French regulations.
How much VAT do you pay on commercial property?
For properties within the VAT system, the France VAT tax rate of 20% usually applies to the purchase price.
For example, if an investor decides to buy commercial property worth €500,000, the VAT due could be €100,000. If the investment qualifies for VAT recovery, this amount may be reclaimed through the French VAT system.
This is why many investors structure their purchases as commercial property investment rather than purely residential acquisitions.
VAT on commercial property rent
In some situations, landlords can choose to charge VAT on rent for commercial property. This can be beneficial because it allows the owner to recover the VAT paid on the purchase or renovation of the property.
If the property is a new build located in a Résidence de Tourisme, and you are required to sign a leaseback agreement, you will usually be required to register for VAT.
In this case, the letting agency (with whom you have the contract) will collect the rent including VAT and pay the VAT directly to the French tax authorities. You will receive the rent without VAT, and you can also recover the VAT you paid on rental-related expenses.
The second situation is when you buy a new build property and provide at least 3 out of the 4 required services (such as hotel-style services). In this case, you have the option to register for VAT.
If you choose to register, you will charge VAT on the rent you receive. You are then responsible for paying this VAT to the tax authorities, but you can also reclaim the VAT you have paid on expenses related to the rental activity.
This approach is common with:
- retail units
- serviced residences
- tourism accommodation
Claiming VAT on new build property
Investors purchasing qualifying developments may be able to claim VAT on new build property by registering for VAT and declaring taxable rental income.
Once registered, owners must file periodic VAT returns and report rental activity to the French tax authorities.
New build VAT exemption
If you are not able to organise the rental activity and therefore cannot provide at least 3 of the 4 required services, the property will not meet the conditions to opt for VAT registration.
In this case, the property will not be eligible to recover the VAT paid on the purchase price.
For this reason, investors should consider the intended rental structure before completing the purchase.
How to claim a VAT refund online
Investors generally recover VAT by registering with the French tax authorities and submitting returns through the online portal.
The process usually involves:
- registering for French VAT
- reporting VAT on property sales or rental activity
- submitting periodic returns
- requesting the VAT tax refund France through the online system
PTI Returns assists non-resident investors with how to claim a VAT refund online and manages the VAT return process on their behalf.
If these conditions are not maintained, previously refunded VAT may be clawed back by the tax authorities.
What are the conditions for VAT reclaim?
To qualify for VAT reclaim for new build property, certain conditions must normally be satisfied.
The property must usually be used in a VAT-taxable rental activity, which commonly includes serviced accommodation or managed holiday rentals.
Examples include:
- serviced holiday accommodation
- tourism residences
Under these structures, investors may recover VAT on new build houses or apartments purchased within the development. In many cases, the property must remain within the rental scheme for 20 years to keep the VAT benefit.
How to avoid French Capital Gains Tax on property
While VAT recovery can reduce the acquisition cost, investors should also consider Capital Gains Tax when eventually tax implications of selling a property in France.
The tax liability may be reduced through several factors including long-term ownership, deductible improvement works, and allowable acquisition costs.
French Capital Gains Tax gradually reduces the longer the property is held, which can significantly lower the effective tax rate over time.
Claim back French VAT with PTI Returns
Reclaiming 20% VAT on a French property purchase can significantly improve the return on investment, but the process involves strict eligibility rules and ongoing compliance.
PTI Returns helps non-resident investors:
- register for French VAT
- file VAT returns online
- reclaim VAT on qualifying property purchases
- stay compliant with French tax regulations
If you are considering buying property or investing in French rental property, PTI Returns can guide you through the process and help maximise your VAT recovery.
Use PTI Returns to find out how much VAT you could reclaim on your French property investment.
FAQs
Do you pay VAT on new build houses in France?
Yes, VAT is generally payable when buying a new-build house in France, with the standard rate typically set at 20% and included in the purchase price.
However, if the property is purchased as a qualifying rental investment, non-resident investors may be able to reclaim the VAT, provided they meet the required conditions.
Can non-residents reclaim VAT in France?
Yes, non-residents can reclaim VAT in France if they purchase a qualifying new-build, serviced residence, or commercial property that is used for a VAT-taxable rental activity. To qualify, investors must meet the French VAT rules, register where required, and comply with ongoing filing and rental obligations.
What is the VAT rate on new homes?
The standard VAT rate on new homes in France is 20%, and it is typically included in the purchase price of eligible new-build properties.
Is VAT included in the purchase price?
Yes, for new build properties and qualifying developments in France, the standard 20% VAT is typically included in the quoted purchase price (Toutes Taxes Comprises or TTC).
However, if you rent out the property as a commercial or short-term rental with Para-hotel services, you can register for French VAT and reclaim that 20% amount back from the tax authorities.
What qualifies as a new build in France?
In France, a new build generally refers to a property that has been newly constructed and has not previously been occupied or sold. These properties are typically subject to the standard 20% VAT rate, and eligible investors may be able to reclaim the VAT if the property meets the conditions of the French VAT reclaim scheme.
Do second homes qualify?
Second homes can qualify only if they meet the same new-build VAT rules, such as being purchased as a new property from a developer. In practice, the VAT treatment depends on the property type and intended use, so a second home does not automatically qualify for any VAT reclaim benefit.
Can I reclaim VAT on holiday homes?
You may be able to reclaim VAT on a holiday home in France if it qualifies as a serviced rental property and is used for a VAT-taxable rental activity.
The property must meet the French VAT reclaim rules, including providing qualifying rental services and complying with ongoing VAT and reporting requirements.
Is VAT different from notary fees?
Yes, VAT is separate from notary fees. VAT is a tax on the property purchase itself, while notary fees cover the legal and administrative costs of the transaction.
What types of French property qualify for a VAT refund?
Certain new-build French properties can qualify for a VAT refund, particularly properties purchased for a qualifying furnished rental activity, such as serviced residences or holiday accommodation. The property must meet specific conditions, including being subject to French VAT and satisfying the requirements for VAT recovery.
How long do I need to keep renting the property to keep the VAT refund?
To keep the French VAT refund, the property generally needs to remain in a qualifying rental activity for at least 20 years. If the property stops meeting the VAT conditions before this period, you may have to repay part of the VAT originally reclaimed.
What happens to the VAT refund if I sell the property early?
If you sell the property or exit the qualifying rental scheme before the 20-year commitment period ends, French tax authorities can claw back the previously refunded VAT.
Do I need to register with French tax authorities to reclaim VAT?
Yes, you generally need to register with the French tax authorities to reclaim VAT on a qualifying property purchase. In most cases, registering for French VAT is a required step in the process, as you must submit returns through the online portal to request your refund.
Is VAT reclaim available on residential property I live in myself?
Generally, no. French VAT reclaim is typically available for qualifying properties used for a VAT-taxable rental activity, rather than a residential property that you occupy as your own home.