Recent evolutions in law and tax related matters testify undoubtedly to the desire to encourage the densification of urban areas and the modernisation of existing real estate stocks, which is consistent with the modernisation, reconversion and densification approach applied in respect of a great many sites in the Ile-de-France region, such as those activities currently under conversion into service industry activities. However, beyond the basic objectives put forth by statutes, practitioners are confronted, in the context of the implementation of a project, with a great many issues in terms of planning law, property law and tax law. For each instance, a detailed examination of the building’s history and of the precise nature of the works contemplated will prove decisive.
Thus in the field of planning law, works on existing buildings or the reconstruction of buildings implies that one scrutinizes all of the authorisations that have been issued, as well as the surveys-steps yet to be accomplished in order to carry out the contemplated project to a successful end. However buildings which have been unlawfully built or converted are not uncommon. In this context, a review of the situation regarding the most recent evolutions in terms of the law and case law which concern them seems particularly appropriate.
The major features of the most recent reform of planning law whose objective is to put an end to the regulatory planning approach in order to replace it with a project orientated planning approach also deserves to be mentioned; indeed they clearly display the objective of facilitating building operations.
If this recent tax and legal regime specific to sales of renovated buildings comes in response to a great many expectations, it remains that the determination of its precise scope of application is not always as straightforward as one might imagine, hence the brief panorama regarding the provisions concerned. The provisions of the mandatory statute governing commercial leases which govern the case scenario of a construction or reconstruction lead to a questioning of the strategy that landlords should adopt in such case scenarios.
The building lease for its part will enable constructions without being the owner of the land.
However the legal and tax rules that are applicable to this instrument must be revisited in light of new practices: upgradeable buildings, versatile land. The picture as regards construction-reconstruction operations would not be complete without examining the main aspects of direct taxation: in particular the treatment of demolition and rubble clearance expenses, as well as construction profits, in consideration of their accounting regime. Finally, the chronology of the stages of a construction-reconstruction operation is not neutral from the standpoint of local taxes. Are thus placed out before you the pieces of the legal and tax puzzle. We hope you will enjoy piecing them together.
Jean-Luc Tixier, Partner
Dossier on Construction and reconstruction
- Major refurbishments: consequences on local taxes p.2
- Sales of buildings for renovation p.3
- Termination notice for the purpose of building or rebuilding: practical aspects p.4
- Tax treatment of construction-reconstruction operations in terms of direct taxation p.5
- Panorama of law and tax liabilities pertaining to building leases p.6
- Construction profits: an incomplete tax framework p.9
- Specificities of constructionsreconstructions and planning law p.12
- The current reform of planning law: working towards a “project orientated planning” approach p.11