Introduction: activities relating to the construction or acqusition of buildings
The activities concerned here are those relating to the construction or purchase of buildings with a view to their sale rather than use, in particular via rental (which does not exclude rentals while the asset is held).
Suchmatters therefore primarily concern:
- development / operations by property developers;
- purchase / resale following any works, e.g. via a split sale / operations by property dealers.
In this context, the assets are normally held “in stock” by such operators.
However, the evolution of the real estate market has created ever closer links between these activities and those of long-term investors.
Indeed, the latter:
- are increasingly arbitraging their real estate portfolios more actively and, seeking a market opportunity, may be persuaded to sell recently acquired assets;
- are willing in certain cases to take greater risks to obtain some of the development profit by acquiring bare plots or buildings that will require restructuring in order to carry out works themselves before renting out the property.
The mixture of these two types of activity was noticed by the tax administration, which amended the 2010 regulations, mainly as regards VAT. This led to the abolition of the so-called “property dealer” tax regime (registers, registration, etc.) and all economic operators are now subject to the same regime, with no distinction made according to their main activity.
This process is still incomplete and subjective notions persist concerning the taxation of profits, including speculative intent, which has a particular impact with regard to the booking of assets.
Ultimately, the taxation of development operations concerns more than just developers and property dealers: it is intended to apply to all those involved in real estate who are participating in the upgrading of real estate in the form of works (construction or reconstruction) or conducting purchase-resale operations (en bloc or split sales).