FRELA provides tax advisory services for conducting pre-sale tax studies.

Are you planning to sell a high-end property?

FRELA helps you conduct your pre-sale legal audit.

Given the complexity of French legal and tax regulations, conducting a pre-sale legal audit or tax compliance review (ECF) allows businesses to engage service providers to enhance their legal and tax security.

Created by Decree No. 2021-25 of January 13, 2021, the tax compliance review grants businesses (individual or corporate), regardless of their turnover and tax regime, the right to entrust a service provider with a preventive control in the form of an audit. This service provider can be a statutory auditor, an accountant, a lawyer, an accounting and management association, or an approved management organization.

FRELA offers a comprehensive service in tax structuring, dedicated to your sales in France.

Entrust your high-end real estate pre-sale legal audit to one of our attorney representatives to receive experienced and knowledgeable advice to secure your real estate sales in France and optimize your tax situation.

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Pre-sale legal audit

The pre-sale legal audit for a real estate acquisition in France, also known as “due diligence,” is a crucial step to mitigate legal risks associated with the purchase of a property.

Here is a list of points considered by our attorney representatives during the pre-sale legal audit:

Verification of property ownership and the existence of easements or mortgages that may affect the right of ownership.

Verification of the property’s compliance with current urban planning and construction regulations.

Verification of compliance with condominium rules and management of the building, if the property is part of a condominium.

Verification of any ongoing disputes or litigation related to the property or its owners.

Verification of the compliance of any existing lease agreements and the applicable rental regulations.

Verification of the existence of ongoing contracts (maintenance contracts, energy supply contracts, service agreements, etc.) and their compliance with applicable rules.

Verification of the property’s tax situation and the tax obligations related to the acquisition and ownership of the property.

Verification of the property’s environmental status and compliance with environmental protection rules.

Verification of the legal capacity of individuals involved in the transaction (owners, sellers, representatives, etc.) to act on behalf of the property.

Verification of the compliance of all contractual documents related to the transaction, such as preliminary sale agreements, deeds of sale, warranties, insurances, etc.

Conducting a thorough pre-sale legal audit helps identify and mitigate potential legal risks, ensuring a smoother and more secure real estate transaction in France.

Pre-sale legal audit and tax compliance review

Regulated by Decree No. 2021-25 of January 13, 2021, the audit process is detailed in Annex 1 of the January 13, 2021 Order. It includes 10 specific points, considered to be the most frequently controlled tax aspects.

The terms of reference mentioned in Article 1 of the decree specify the conduct of the tax compliance review for each point of the audit process and determine the obligations of the service provider in their contractual relationship with the company. These terms of reference are specified in Annex 2 of the January 13, 2021 Order.

The tax compliance review covers one fiscal year and results in a mission report prepared by the service provider, following the model defined by the January 13, 2021 Order. This document must be transmitted to the General Directorate of Public Finance (DGFIP):

• no later than October 31 of the year of filing the tax return, for fiscal years coinciding with the calendar year,
• within six months following the filing of the tax return in other cases.

It must be kept by the parties until the expiry of the tax authorities’ right to make a reassessment.

This measure does not exempt the company from its obligations, but in the event of a tax audit resulting in a tax reassessment on an audited and validated point by the service provider, the company may request reimbursement of the corresponding part of the fees.

Furthermore, if the company has taken into account the recommendations made by the auditor, the DGFIP may not require the payment of penalties or late interest.

(Source: economie.gouv.fr)

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