French VAT Option for Commercial Property Rent 2026

Any landlord — individual or legal entity (SCI, SARL, EURL or other company) — who lets bare premises for professional or commercial use (offices, warehouses, retail units) may elect VAT under Article 260, 2° CGI, regardless of whether they are subject to personal income tax (IR) or corporate tax (IS). The election remains available in 2026 even when the tenant is not VAT-registered, though it is only economically worthwhile when the tenant can actually recover the VAT charged. Residential premises are strictly excluded.

No CERFA form is required — the election is a simple free-form letter addressed to the SIE (Service des Impôts des Entreprises) with territorial jurisdiction over the property. The letter must identify the landlord (name or company name, address, SIRET number) and describe each property precisely (full address, land registry references where available). Deliver it in person against a dated receipt, or send by recorded delivery with acknowledgement (lettre recommandée avec accusé de réception — LRAR): the SIE's date of receipt sets the election's effective date.

The election binds the landlord for a minimum of nine years from its effective date. To prevent tacit renewal, written notice of termination must reach the SIE before the end of the ninth year of commitment — practitioners recommend sending the termination letter at least three months before that deadline. Without such notice, the election renews automatically for a further nine years. On a property sale, the election transfers automatically to the buyer for the remaining portion of the current nine-year period.

The standard French VAT rate of 20% applies in 2026 to the net rent (HT — hors taxe, i.e. before tax) and to any service charges re-invoiced to the tenant. Security deposits are not subject to VAT provided they retain their guarantee nature. Works on professional premises — whether new construction, renovation or maintenance — are fully subject to the standard 20% rate; the reduced 10% rate available for works on residential buildings does not apply in this context.

An opted landlord may deduct input VAT on all VAT-bearing expenditure related to the property: renovation works (20% VAT recovered on the net invoice), property management and syndic fees, service charges invoiced with VAT, and the VAT element of notary fees. Note that insurance premiums are VAT-exempt in France under Article 261 C-2° CGI and carry no deductible VAT. For a property originally acquired with VAT within the preceding 20 years, the election stops the running annual adjustment (one-twentieth per year), which can represent tens of thousands of euros over the nine-year commitment.

Yes — the election is attached to the property, not the landlord. A buyer inherits the election for the remainder of the current nine-year period, together with all its obligations (VAT billing, CA3 return filing, duration commitment). If the buyer is a non-taxable person — a private individual or an exempt organisation — or does not intend to continue letting with VAT, the selling landlord owes a VAT adjustment calculated pro rata on the years remaining in the 20-year adjustment period (one-twentieth per remaining year), which can be a significant cost on an early disposal.