VAT election to be liable for VAT on rents

The company SARL Maysam France had acquired an office building. The company argued that it was not be subject to VAT on the rents received in respect of this building in the absence of an express option made for the payment of VAT on the rents.

However, on the statement submitted to the CFE (Centre de Formalité des Entreprises) at the time of the setup of the company, the latter had elected for payment of VAT according to the quarterly regime, that statement mentioned the identification of the building (the sole building rented out) and it was indicated that the election was made, “unless expressly terminated within three months of the start of activity” for a period ending on the 31st of December of the following year. On this basis, the Court ruled that the statement was detailed enough to identify the building covered by the option made and therefore the company had indeed elected to be liable for payment of VAT on the rents in accordance with Article 260, 2° of the French tax Code and was therefore liable to pay VAT. The Court made an application of the “Mercedes” case (Conseil d’Etat, December 23th, 2011, n° 323189) against the applicant.

Michel Guichard

Michel Guichard, Partner, leads the Indirect Tax activity. With more than 30 years’ experience in International and French Tax law, he advises his clients on indirect tax matters. Michel is […]

Odile Courjon

Odile Courjon, Partner, has developed a strong expertise in indirect tax issues (VAT, wage taxes, excise taxes, export control and customs) in France and overseas. She advises her clients in […]

Bertrand Jeannin

Bertrand Jeannin, Partner, supplies strategic and technical advice to French and foreign multinational groups in all aspects of their VAT and customs policies. Major focuses of Bertrand’s input involve the […]

William Stemmer

William Stemmer, Partner, has more than 15 years’ experience in Indirect Tax matters. William particularly specializes in the real estate and financial sectors. William is a lecturer at the University […]