Real estate development based on a long leasehold and marketing costs: what about the VAT?

When it comes to real estate development, it happens frequently that the developer erects the constructions based on a mere long leasehold with deferral of the ownership transfer. As a consequence, prospective buyers are being offered to contract with two distinct sellers: the developer with respect to the constructions (either sold on plan, casco or after completion of the project) and the freehold / land owner with respect to the land part. The buyer is then paying VAT on the construction parts only (e.g. 21%) whilst the land parts are sold with application of the transfer tax (e.g. 12,5 %, with possible local tax reliefs… (topic in french)

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