France betrays Britons with hidden £100k tax bill over holiday homes
Many Britons took advantage of a generous tax break in the 2000s, allowing them to purchase property without having to pay the usual 20 percent VAT levied on such sales.
British property owners in the French Alps are facing potential penalties of over £100,000 to sell their accommodation.
Many Britons took advantage of a generous tax break in the 2000s, allowing them to purchase property without having to pay the usual 20 percent VAT levied on such sales.
To avoid the VAT charge, property owners had to sign up for a deal whereby they would rent out their accommodation to tourists for at least 20 years, providing a hotel-like service.
Under the terms of the scheme, owners retain the right to stay at their properties for just a few weeks each year.
The scheme appeared to be a win-win for both the French tourism industry and investors, who could save tens of thousands on property purchases.
However, in France, leaseback companies can charge a so-called "eviction indemnity" at the end of the term.
That fee is normally the equivalent of between one to three years of the property's turnover.
One company, Pierre & Vacances, is alleged to have assured buyers that it would not charge investors an exit fee at the end of the contract, the Telegraph reports.
A letter from the firm seen by The Telegraph allegedly reads: “We shall not ask you for compensation of eviction or any kind compensation if you decide to take back your property in conditions specified [...] or if you refused to give us renewal to its normal term.”
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The company, though, is now claiming it never had the right to waive the eviction indemnity in the first place.
Rob Lakey, 45, from Poole, claims he was hit with an “extortionate” €105,000 (£87,485) charge.
He said the property had been purchased to provide his wife with a pension on her retirement.
"This property was supposed to be my wife’s pension because she didn’t have anything at the time," he told The Telegraph.
"The intention was to have a simple long-term investment.”
Pierre & Vacances argues that a recent court judgment made in 2023 means it was never entitled to waive the eviction indemnity.
A spokesman for the company said: “Pierre & Vacances operates apartments as tourist residences under commercial leases.
“The rules applied by Pierre & Vacances comply with the French Commercial Code. The law in force is defined according to the location of the residence, in this case, France.
“Our wish is to continue our activity as an operator and therefore to retain a maximum number of flats. Keeping the business is also essential for the many landlords who wish to continue their leasehold relationship with Pierre & Vacances.”
