is Vat from a French Leaseback taxed in ireland when refunded?

M

mikepatton

Guest
Hi,
I hope someone maybe can give me some answer to the above question, i am in the process of purchasing a French Leaseback property in Pins d'or ( southwest region of france) from a property company in Dublin called Prunty's for 139k plus vat of 19.6% giving a total of 176.000approx. i have been told the the 19.6% is refunded approx 3/6mths after the development is finished in mar'06

however i am finding them not very helpful as i have asked them repeatly is the vat that i get back taxed by Revenue in ireland or not and is the rental taxed?

they say they will get back to me but as of yet after going to dublin 3 times and countless calls but to know avail

i know it is silly but as i am due to sign final contracts in a few weeks i need to know or i think ill walk away from it? i have paid a deposit of 5k down already,and am worried i will not get it back if i walk away?

many thanks for the help
 
Re: is Vat from a French Leaseback taxed in ireland when refunded?/

Surely you only pay taxes on Capital Gains or Dividends, Income etc when you earn money, not when you are refunded money. Otherwise you'd be paying income tax on items you return to Dunnes Stores too. Make sense?

Give Revenue a call to be sure.

Regarding the investment company not giving you answers, that is a concern in itself because it casts doubts on their ability to manage the project - these people are generally not shy to claim that they work with top investors, banks and lawyers. Weird this simple question can't be answered promptly. Are there issues you haven't asked about and that they should be telling you?
 
The VAT refund you receive will not be subject to Irish Tax.

However when you sell the property your cost will be the cost you paid less the VAT refund.

Also remember you may have to refund a part of the VAT if the property is not rented under the leaseback scheme for 20 years.
 
I read with interest your articles regarding investing in France/leaseback arrangement. I have just paid off my home mortgage. I am really interested in buying a property in France ( stable environment etc).
 
I read with interest your articles regarding investing in France/leaseback arrangement. I have just paid off my home mortgage. I am really interested in buying a property in France ( stable environment etc). I have 30k in available cash plus two fully paid SSIA's coming next April. I am prepared to sit in for the long haul ( up to 15 years) and would be interested if anyone has done this already. I have been in touch with an Irish company who deals in this market and am due to meet them in 3 weeks.
 
I don't think you need to be an more carefull with a French lease back than another investment.

The can are are a good investment if it is the right property and the circcumstances suit the investor. However like all investments you must consider the propery and whether the leaseback rule suit your circumstances
 
Arch,

One interesting point to note that I only discovered recently is that despite the double taxation agreement between France and Ireland it doesn't cover CGT. So, at present anyone who profits from the sale of a property in France will have to pay CGT on the profits in both jurisdictions (assuming domicile in Ireland).

This disturbing fact is contained in the free Investor's Handbook distributed by First Active on page 75 of Chapter 20, Overseas Property. I'm assuming this is true but I will be double checking the validity.
 
Mike,

I'm only in the research stage at this point but extremely interested in French leasebacks as an investment. One thing I have noticed is that Irish and UK agents for these properties tend to charge a healthy premium for the services they provide which is hidden in the cost of the property. For example I found a property advertised by an Irish agent on the web; when I did a search with a French agent it was about 20% cheaper (approx. €28 000).

Make sure you are getting your moneys worth if you are going with an Irish agent, they can really cut down on the bureaucracy and red tape for you and most do add value but be aware of the price you are paying for this. Also, they are providing a service to you at a cost so make sure that they provide a quality service, don't take the level of service that you are experiencing right now. I would call them and explain that the level of service is less than desired, re-iterate your requests and give them a deadline to respond. If necessary ask for you contact's manager. Then check if your deposit is refundable if you pull out.

Good Luck.
 
Galwegian44 yes you are correct the dexisting DTA between irl-France pre dates CGT and hence does not cover it.

A new DTA is expected to be negoitated by the end of 2006, so this disadvantage should disappear.

On the other poster point of leaseback advertised at a different price between Irish and French agent. I have not seen this before, however it may be that the Irish agent advertised the full price (VAT inclusive) and the French agent (VAT exclusive) I have noticed that some agent advertise net of vat and others inclusive
 
ARCH said:
however it may be that the Irish agent advertised the full price (VAT inclusive) and the French agent (VAT exclusive) I have noticed that some agent advertise net of vat and others inclusive
Click to expand...

Arch,

This was indeed the case as the French site did not include the VAT but even allowing for this there was a 20% differential in the prices quoted.

G44
 
ARCH said:
Also remember you may have to refund a part of the VAT if the property is not rented under the leaseback scheme for 20 years.
Click to expand...

Hi Arch,
I am not sure this true.
Partial VAT will have to be refunded if the property is sold before 20 years, but my understanding is that it is not related to the rental period.

By law, the minimun initial lease period has to be 9 years. After that, you may decide to renew the lease with management company or not. If you decide not to renew the lease and not to sell, then you do not have to refund VAT.
 
Bacchus,

I think your explanation is more precise and correct although my guess is that is what Arch meant.

What are people's thoughts on the type of properties to buy. My feeling so far is that I don't want to invest in the €90,000 to €150,000 property market because I feel that these properties will be "stale" by the time I go to sell in 20 years. These are generally 1 - 2 bed apartments in blocks. To assume less risk I'm thinking of partnering with a couple of friends and buying a free standing property in the region of €450,000 - €600,000 as I believe that this will stand the test of time a lot better. Would be interested in people's views on this, especially people who have actually bought.

Thanks in advance.
 
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