I read with interest in an article by Fabien Cordiez linked to from the forum a while ago that new rules came into force in 2010 to help leaseback owners faced with repaying the TVA on their build if they exited leaseback. I am sure that the article said that there was a one year grace period to get either a new lease in place or an owners cooperative, but if you didn't want to continue in leaseback at that stage, the proportion of TVA outstanding could be paid back over 3 years instead of being payable immediately. We are faced with this issue now, and there seems to be conflicting opinion around the one year grace period and regarding whether there is indeed 3 years to repay any TVA outstanding. Can anyone of authority or from actual experience advise. If Fabien is still looking at the forum perhaps he could post an update re this? Many thanks
The rules applies as from 2009 and stems from article 23 of the Finance Act 2010:
Articles 23, 86 et 87 de la loi de finances pour 2010
(n° 2009-1673 du 30 décembre 2009, Journal officiel du 31 décembre 2009)
....En cas de rupture de l'engagement de location pendant une durée supérieure à douze mois en cas de liquidation judiciaire de l'exploitant, de résiliation ou de cession du bail commercial par l'exploitant, ou de mise en oeuvre par les propriétaires du bénéfice de la clause contractuelle prévoyant la résiliation du contrat à défaut de paiement du loyer par l'exploitant, la réduction d'impôt fait l'objet d'une reprise pour le tiers de son montant au titre de l'année de la rupture de l'engagement de location et de chacune des deux années suivantes. »
Thank you for your reply Fabien. I am still worried however as I am being told by those claiming to be 'in the know' that the one year grace period then 3 year payback provision only relates to the income tax breaks awarded to French tax residents on taking up leaseback schemes and not to the TVA reimbursement. This is crucial to know, since being hit with a huge bill within months of Soderev pulling out unilaterally would be financially very difficult to swallow. If Fabien could come back on his interpretation I'm sure all the forum users would find it helpful. Thank you again.
Having double-checked the position, I can advise that repayment over 3 years only applies to income tax advantages, not VAT. Here is the relevant tax document on the subject: http://www11.minefi.gouv.fr/boi/boi2010/5fppub/textes/5b2210/5b2210.pdf
Thank you for having raised the issue Graeme.
So, when leases get terminated, French tax authorities can demand that VAT be repaid. Leaseback owners can of course ask for repayments to be spread over a given period. Tax Authorities can, in any event, deduct the balance of the VAT due from the sale price, or register a charge against Title, in respect of the VAT liability.