TVA clawbacks

My wife and I have been living in France for 10 years running a properly registered gite business. A barn on our land. We are French tax payers. Sadly my wife now suffers from severe arthritis in both her hands and with swollen fingers work is very painful. She has difficulty in opening bottles etc. So we advised our accountant of our intention to stop the business and retire. I am 65 and she is 60. we do not want French pensions. He explained that as we received a refund of TVA on building work when we renovated the barn for use we were liable to repay 50% of that amount as there was a clawback period of 20years for TVA on building work. He suggests we keep on working to avoid the clawback. Has anybody experienced anything like this before?

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Yes, any TVA rebate is essentially a “loan” over 20 years. You pay the amount back pro-rata until the 20 years are up if you stop you business or sell the property on which you received the rebate.

Goodness me… this sounds like something folk need to bear in mind from the onset…as it can come as a nasty shock, if not (as in David’s case).

David… can you continue to run the business with a very-much reduced availability. One week every 6 months per year, would perhaps be viable for you both to cope with…but no idea if this sort of thing meets TVA-rebate requirements…

Thanks Stella for your input.
We assume we will still have to do quarterly tva returns via an accountant which costs us 500 euros each time plus maintain a business account which costs us 30 euros per month so the option of very low activity will not work for us.
It is a shame we did not know this at the outset. We went to the local chamber of commerce and they arranged all the stuff for us.
David

Thanks Phillip. I accept the concept but it is a shame the chamber of commerce who helped us set up the business did not make the situation clear. I was 55 at the time so it would have been folly to enter into a 20year arrangement.
Given that we are in effect retiring through ill health can i arrange with the tva people to repay my “loan” over a period of time.
My accountant says i will have to repay it all next April.
David

David…

Personally… I would go along to the Tax offices and speak with someone face to face. Tell them about your health situation (and thus financial situation) and ask what can be done to sort things out re the TVA… what, if anything, can they suggest…

That is me…I generally find a direct approach works well… no flannel… just explaining how things are…(on whatever subject).

However, someone may have a better idea for you…

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2K€ per year just for TVA returns? Why would you not do them yourself?

Thanks for the input. sadly not the greatest with paperwork. Also saw too many friends get into trouble with tva errors.
David

Message du 16/11/17 21:04
De : "Jonathan Badger"
A : david.morgan@wanadoo.fr
Copie Ă  :
Objet : [Survive France] [Banking & Financial/Tax & Social charges] Tva clawbacks

Badger Jonathan Badger

November 16

nm486151:
…have to do quarterly tva returns via an accountant which costs us 500 euros each time…

2K€ per year just for TVA returns? Why would you not do them yourself?

Visit Topic or reply to this email to respond.

In Reply To

nm486151 david Morgan

November 16

Thanks Stella for your input. We assume we will still have to do quarterly tva returns via an accountant which costs us 500 euros each time plus maintain a business account which costs us 30 euros per month so the option of very low activity will not work for us. It is a shame we did not know this…

Badger Jonathan Badger
November 16
nm486151:
…have to do quarterly tva returns via an accountant which costs us 500 euros each time…

2K€ per year just for TVA returns? Why would you not do them yourself?

Visit Topic or reply to this email to respond.

In Reply To

nm486151 david Morgan
November 16
Thanks Stella for your input. We assume we will still have to do quarterly tva returns via an accountant which costs us 500 euros each time plus maintain a business account which costs us 30 euros per month so the option of very low activity will not work for us. It is a shame we did not know this…
Visit Topic or reply to this email to respond.

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I think you are right Stella.

Message du 16/11/17 14:52
De : "stella wood"
A : david.morgan@wanadoo.fr
Copie Ă  :
Objet : [Survive France] [Banking & Financial/Tax & Social charges] Tva clawbacks

smwsplr stella wood Team

November 16

David…
Personally… I would go along to the Tax offices and speak with someone face to face. Tell them about your health situation (and thus financial situation) and ask what can be done to sort things out re the TVA… what, if anything, can they suggest…
That is me…I generally find a direct approach works well… no flannel… just explaining how things are…(on whatever subject).
However, someone may have a better idea for you…

Visit Topic or reply to this email to respond.

In Reply To

nm486151 david Morgan

November 16

Thanks Phillip. I accept the concept but it is a shame the chamber of commerce who helped us set up the business did not make the situation clear. I was 55 at the time so it would have been folly to enter into a 20year arrangement. Given that we are in effect retiring through ill health can i arran…

certainly worth a visit to the local tax office. I usually have found them helpful and give clear info…but no rebates though.

Thanks Phillip, thats the way forward I think. I will visit them early 2018 just before our TVA return is due. I looked up all the paperwork we had when we set up the gite enterprise in 2007. Both CCI and accountants mentioned we could have a TVA benefit but neglected to mention the 20 year rule. However it has caused us to review our total tax planning as it has always been our intention to return to UK when I reached 70 so we need to make sure our exit strategy is still workable.

Book early to make sure you get to see them on time

Is it not possible to change regime? Downsize the business, become a micro, operate below the TVA threshold, do your own accounts and simply tick over until the claw back period ends. Would this not work?

What happens if you sell the business as a going concern?

Thanks for contact. Apparently having a gite building and business on the same property means I have a maison principal and maison secondaire on the same site so will attract plus valu on 2nd property as well as TVA clawback.

Thanks for suggestion. Could be possible I think but will have to check. Complication comes in the overall scheme of things re taxation. To continue means I will have to pay cotisations I think. That nullifies my S1 which in theory takes CSG from my overall tax position.

If you ran a successful gite business for ten years, then I assume you have made ten years worth of contributions towards a French pension, a French pension which you should now be entitled to. Retirement age in France is 62 on a standard pension or 66 on a higher pension. I personally would make some enquiries as to what its worth.

This all seems very odd.

Could I politely ask whether the OP was given any advice before setting up the business under TVA and renovating a barn which would attract CGT if sold within a set period?

Hi Timothy thanks for your input. When we had our idea of a business we visited the departmental chamber of commerce who had an english speaking section in 2007. We outlined our project and sought their input. They provided us with an economic profile of the likely turnover of a gite business operating for 12 months of the year in their experience and in their department. They suggested that with the likely turnover we should register for TVA at the outset. They completed the formalities and registered us and we duly received our SIRET AND SIREN data in due course. At the meeting they also introduced us to an english speaking accountant who subsequently set up all the TVA arrangements.
We sought advice, we received it and we acted upon it. Lesson learnt

Message du 18/11/17 16:55
De : "Timothy Cole"
A : david.morgan@wanadoo.fr
Copie Ă  :
Objet : [Survive France] [Banking & Financial/Tax & Social charges] TVA clawbacks

tim17 Timothy Cole

November 18

This all seems very odd.
Could I politely ask whether the OP was given any advice before setting up the business under TVA and renovating a barn which would attract CGT if sold within a set period?