Property dealer VAT: margin scheme, full price and transfer duties (2026)

Quick answer. For a property dealer, VAT applies either to the margin — the difference between sale and acquisition price (Article 268 CGI) — when the acquisition gave no input deduction, or to the full price when the property is new or input VAT was deducted. At purchase, a commitment to resell within five years (Article 1115 CGI) cuts transfer duties to land-registry tax of 0.715%, versus an ordinary duty of around 5–6%.

The property dealer's VAT regime rests on long-standing, stable provisions — Articles 268 and 260 of the General Tax Code date from the 1970s — refined by recent case law. One change deserves attention: Ordinance no. 2025-1247 of 17 December 2025 recodifies all VAT law into the new Code on Taxes on Goods and Services (CIBS), effective 1 September 2026. Articles 268 and 260 will move to new numbering, but the substance of the regime is unchanged. We return to this at the end.

At Hayot Expertise, a firm registered with the Ordre des experts-comptables and a statutory auditor, we lock in this classification at acquisition: a wrong choice commits VAT and transfer duties for the whole transaction, and is hard to correct once the deed is signed.

It all turns on what happened at acquisition.

VAT on the full price#

VAT applies to the entire sale price when:

• the property is a new building (completed within five years), where acquisition gave an input deduction;
• the acquisition was from a VAT-registered seller (developer, another dealer) who charged recoverable VAT;
• the dealer elected to tax the operation (see below).

Example. A dealer buys a new building from a developer for €500,000 excluding VAT, i.e. €100,000 of VAT, which it recovers. On resale at €620,000 excluding VAT, it collects €124,000 of VAT on the full price; the net VAT remitted reflects the input VAT already deducted.

VAT on the margin — Article 268 CGI#

VAT applies only to the margin when the acquisition gave no input deduction, typically a purchase from a private individual. Article 268 CGI defines the taxable base as the difference between the sale price (and related charges) and the acquisition price.

Example. A dealer buys an older building from a private owner for €400,000, with no VAT. On resale at €500,000 excluding VAT, the taxable margin is about €100,000, on which 20% VAT applies, i.e. €20,000. The buyer receives an invoice of €500,000 excluding VAT plus that VAT.

The qualification-identity condition#

The Conseil d'État (27 March 2020, no. 428234) set a key condition: the margin scheme requires matching legal qualification between the property acquired and the property resold. A building plot must have been acquired as a building plot; a property whose nature changes between purchase and resale shifts to the full-price regime. Altering a building's intended use after acquisition is therefore a classic pitfall.

The sale of a building completed more than five years ago is, in principle, VAT-exempt. Article 260, 5° bis CGI lets the dealer voluntarily elect to tax the operation. The benefit: recovering input VAT (acquisition, works) and making resale easier to a VAT-registered buyer, who can in turn deduct the VAT.

Use case. A dealer buys an older building for heavy renovation. Without the election, VAT on the works is not recoverable; by electing, the dealer taxes the operation and deducts VAT on the works. The election must be formalised before VAT becomes chargeable, and at the latest at the signing of the deed; its precise terms appear in BOI-TVA-IMM. The question is therefore best settled before acquisition.

This is the second pillar of the planning. At purchase, the dealer benefits from a favourable transfer-duty regime, subject to a formal commitment.

The resale commitment — Article 1115 CGI#

Article 1115 CGI exempts from transfer duties acquisitions made by a VAT-registered person, which then bear only land-registry tax at the reduced overall rate of 0.715%, subject to a commitment to resell within five years. The saving is material: the ordinary transfer duty is around 5–6% of the price, versus 0.715% under the commitment.

If the property is not resold within five years, the commitment lapses: the authority can claim the ordinary duties, plus late interest. The commitment is therefore a genuine obligation to monitor over time.

The building commitment — Article 1594-0 G CGI#

A variant aimed more at developers, the building commitment opens a near-exemption (flat fee) subject to a commitment to build. Within five years, it can be substituted by the Article 1115 resale commitment if the construction project is abandoned.

Transfer-duty summary#

Dealer, developer, land subdivider#

The property dealer buys existing buildings and resells them as is or after works: Articles 268, 260 and 1115 apply. The developer builds and sells new buildings, taxed on the full price under Article 257 CGI. The land subdivider splits a plot into lots for resale; its VAT regime is close to the dealer's. Keeping these trades distinct avoids costly classification errors.

Older building with substantial works#

A dealer buys an older building without election for €300,000, spends €80,000 on works, then resells for €450,000. Margin VAT applies to the difference between the resale and acquisition prices, less allowable costs. Caution: works that transform the property into what counts as a new building shift the operation to full-price VAT.

Lot-by-lot resale#

A dealer acquires a multi-unit building under the margin scheme, then resells the lots one by one. Fractioned resale can lead the authority to apply full-price VAT, the resold asset no longer being identical to the one acquired. In that scenario, electing to tax at acquisition secures the treatment.

From 1 September 2026, VAT provisions (Articles 256 et seq., 260, 268) move from the CGI to the Code on Taxes on Goods and Services (Ordinance no. 2025-1247 of 17 December 2025). The substance — margin, full price, option, commitments — is unchanged, but article references evolve. After that date, check the current numbering in your deeds and analyses; we guide our clients through this transition.

We recently advised a property-dealer company on acquiring an older building with five units to renovate and resell. Two routes were open: margin VAT, without election, or electing to tax in order to recover VAT on the works. The project planned about €200,000 of works, i.e. nearly €40,000 of input VAT. Without the election, that VAT was a cost; with it, it became recoverable, the operation being taxed on the full price and the end buyers, registered for VAT, able to deduct the VAT in turn. We recommended the election, made before the deed, and formalised the resale commitment to benefit from the 0.715% transfer-duty rate.

Our field rule: the VAT regime of a property dealer is decided before acquisition, in light of the resale plan and the works programme. Once the deed is signed, the room for manoeuvre closes.

Hayot Expertise advice. Before each strategic acquisition, settle the VAT question: margin or full price, election or not, resale or building commitment. These choices drive the profitability of the deal, and the resale commitment must be made at the time of the deed, never afterwards. On deals with heavy works or lot-by-lot resale, a prior simulation avoids permanent extra cost.