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In France, the leasing of empty land and premises, which are considered to be transactions of a civil nature, is exempt from VAT, except for parking spaces for vehicles and except where the leasing constitutes a means for the lessor to continue, in another form, the operation of a commercial asset or to increase its commercial perspectives or where the lessor participates in the profits of the lessee company (article 261 D 2° of the CGI).

Nevertheless, it is possible to voluntarily opt for the payment of VAT on the rent of bare business premises. This option may have a significant advantage, particularly in terms of optimising the charge of the renovation works.

According to a recent decision of the Conseil d'Etat (CE 9 September 2020, N°439143), and in contradiction with current administrative doctrine, it is accepted that the option may be exercised per room, and not for the building as a whole. Thus, lessors will be able to opt for VAT only when the lessee can recover the VAT. This makes it possible to manage a lessor's commercial offer in a much finer way. On the other hand, particular attention must be paid to the recovery of VAT on renovation works, since only VAT on areas rented with VAT can be recovered by the lessor.

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