Last Updated on March 20, 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 property 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.
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 French Capital Gains Tax when eventually selling the property.
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.