Marchands de biens regime in France: Tax benefits, determination of taxable income, and taxation regime

In France, individuals who habitually purchase and resell immovable properties, businesses, stocks, or shares of real estate companies are considered “marchands de biens.” They also include those who engage in intermediary operations for the purchase, subscription, or sale of such goods and those who benefit from a unilateral promise of sale of a property sold in fractions or lots.

To be considered a “marchand de biens,” three conditions must be met: operations must involve purchases followed by sales, the goods involved must be specifically listed, and the operations must be habitual and intended for resale.

Tax benefits applied to “property dealers” in France.

Companies considered to be engaged in “marchands de biens” activities or similar activities must comply with the rules governing industrial and commercial profits for the determination of their taxable income.

Taxable income applied to “property dealers” in France.

The taxable income mainly results from the sale of real estate, which is considered inventory rather than fixed assets. This has several consequences, such as profits realized from the sale of these properties constituting taxable income subject to corporate tax and no depreciation being claimable on these properties.

Taxation régime for “property dealers” in France

Companies engaged in property trading activities are subject to corporate tax and must opt for either the simplified or normal real profit regime. The simplified regime is the default regime for companies whose annual turnover in the previous year does not exceed €818,000 or €247,000, depending on whether they engage in sales or intermediary activities.

The normal real profit regime applies automatically to companies whose annual turnover exceeds the limits of the simplified regime or, on option, to companies normally subject to the simplified regime.

Property traders are subject to the same VAT rules as all taxable persons, and the margin scheme applies to them under certain conditions. In terms of transfer tax, the special regime of Article 1115 of the CGI applies in particular to property traders.

Overall, the “marchands de biens” regime in France provides tax benefits such as VAT being applied only on the margin generated by the resale of the property, reduced notary fees, and no social charges on salaries if the company has no employees.

As a foreign investor who operates numerous real estate transactions, the status of “property dealer” can be advantageous for you. To help you to create your status as a “marchands de biens” in France, it’s recommanded to hire a lawyer, it will secure your transactions and optimize your taxations !

About the Author :

Business lawyers, bilingual, specialized in acquisition law; Benoit Lafourcade is co-founder of Delcade lawyers & solicitors and founder of FRELA; registered as agents in personal and professional real estate transactions. Member of AAMTI (main association of French lawyers and agents).