Registration fees (TPF)

Where real estate assets are disposed of, registration fees in France go under the name of Taxe de Publicité Foncière (TPF) [“Land Registration Duty”].

Indeed, they are paid at the time of registering the transfer of ownership of the real estate assets, as part of the so-called "all-in-one" formality (the formalities of registering the transaction itself and details of the changes in land ownership are completed via a single procedure). 

All transfers of ownership may be subject to TPF and/or VAT, bearing in mind that in some cases, both taxes may apply cumulatively, whereas in others, conversely, neither may be payable.  

Operations concerned

The following are liable to TPF:

• Sales (as opposed to transfers for no consideration, such as donations and inheritances), which include:
  • - apportionments with payment of compensation (TPF being payable on the amount of the compensation),
  • - exchanges (see hyperlink Focus - Exchange),
  • - contributions of assets to a company in return for a consideration (and outright contributions in some cases (see hyperlink Focus - Contributions to a company),
  • - amicable settlements,
  • - payement in kind,
  • - ...
    
    
• On the other hand, TPF does not apply to certain specific operations, such as:
  • - withdrawals within the framework of a sale with option of repurchase (such withdrawals must take place within 5 years of the initial sale),
  • - outright contributions to a company (excluding specail cases, see hyperlink: Focus - Contributions to a company),
  • - apportionments (but an apportionment duty is the applied),
  • - transactions set aside by order of the courts,
  • - ... 

Assets concerned

For TPF to be payable, the object of the transfer of ownership must be a right in rem within the meaning of the Civil Code. This includes ownership, usufruct, bare ownership, user rights, mortgage, long leases, real estate asset leases, etc.

A counterexample is the assignment of leaseholder’s rights under a lease agreement (see hyperlink: Acquisition / Disposal > Lease) involving a personal right derived from the existence of a contract with the lessor (the right to become the owner if an option is taken up). This is not a right in rem, so TPF is not payable (but registration duties on the lease right).

The right must relate to a real estate asset located in France. 

Date of operation

TPF is payable where the sale can be considered as completed, in other words where there is an agreement regarding both the real estate asset in question and the price (Article 1583 of the Civil Code). Consequently it is important to look out for any conditions precedent or avoidance clauses provided for within the framework of disposal. 

Likewise, any contractual deferments of transfer of ownership need to be addressed. 

On the other hand, this means ensuring that deeds which, at first glance, do not appear to constitute sales are indeed not sales. In particular, this is the case with unilateral or synallagmatic undertakings, which in some cases conceal a firm and final agreement regarding the property in question and the price, and may therefore be classified as sales.

 

Base for assessment 

This is the price or the market value of the asset sold, if the latter is higher (Article 683 of the FTC). 

The price is that provided for in the contract. It may be increased by various items deemed to constitute charges that are added to the price. 

ðA charge added to the price is any direct or indirect benefit granted by the purchaser to the vendor within the framework of the transfer of ownership. 

For example:

• payment by the purchaser for building works carried out by the vendor prior to the sale;
• postponement of possession to a date subsequent to the sale, thereby enabling the vendor to receive rents beyond the time of disposal;
• payment by the purchaser of taxes normally payable by the vendor;
• VAT settlements ;
• etc,.

Conversely, there may be charges that reduce the price, where the vendor agrees to bear certain costs or to waive revenue to which it would be entitled.

 

  Normal rate

Where TPF is payable, the rate at whicht applies results from the application of various duties, namemy:

• Ordinary law: (5.09%)
  • - Département transfer duty: 4.5%
  • - Municipal tax: 1.20%
  • - Contribution for assessment and collection charges: 0.09%*
  • *(2.37% of the département transfer duty)
    
    
• Fee for property transaction formalities at the rate of 0.10% (formerly the "registrar's fee") is added to the amount of the duties.

ð Possible increase in département transfer duty (Article 77 of the 2014 Finance Law) from 3.80% to 4.50% between 1 March 2014 and 29 February 2016

ð I.e. a global rate, depending on the départements concerned of: 

 

 Thus far, most départements in France have exercised their option to increase the département transfer duty. Paris' Council has voted in November 2015 the rise of the registration fees. Since January the 1^st 2016, the rate of the transfer duty is now of 4.5%.

Article 116 of the Finance Law for 2015 makes permanent those taxes applicable at the end of February 2016. In those departments where rates have been raised before this date, the applicable rate will also be 5.807% as of February 2016.

 In some cases, a lower rate is applicable.

Lower rate

• Département transfer duty: 0.70%
• Contribution for assessment and collection charges: 0.015%*
• *(2.14% of the Departement transfer duty)

ð  Total duty: 0.715%

This rate applies in particular to the following operations:

• disposal of a brand-new real estate asset subject to VAT (see hyperlink Development > Development operations > VAT > New buildings);
• acquisition of a real estate asset with an undertaking to resell it within 5 years (see hyperlink Development > Acquisition and resale > TPF)  (Article 1 115 of the TPF);
• so-called sale and leaseback operations (see hyperlink Acquisition / disposal > Leasing > Agreement entered into);
• certain farming operations, land consolidations;
• certain operations of a social nature. 

Exemptions

Some operations enjoy total exemption from TPF (application in principe of a single fixed duty of €125):

• acquisitions with an undertaking to build (see hyperlink Development > Development operations > TPF > land for building);
• acquisitions by the state or by local authorities;
• compulsory purchases;
• certain operations of a social nature;
• outright contributions.

 

Purchases of real estate assets that are undergoing a major restructuring operation may be treated as purchases of real estate asset land (with an undertaking to build) for the purpose of the application of TPF (if the operation meets a number of criteria, see hyperlink  Focus - Major restructuring operations  ).

 

 

Payment of TPF

Registration fees or TPF are payable at the time the deed is signed. If the deed is notarised, these duties are paid on the date on which the deed is posted in the notary’s accounts. 

If there is no notarised deed (this applies mainly to disposals of company shares), duties are payable at the time the deed is registered within thirty (30) days of its signature. 

Duties are payable by the purchaser (even though the price is determined "deed in hand", and they are then deducted from the price paid to the vendor). 

Nevertheless, all parties to the deed are jointly and severally liable for making this payment and they may be held liable where a tax adjustment is made.