12. Fees and Taxes

1. 12.1 Composition of Charges
2. 12.2 Calculation of Charges
3. 12.3 Reducing Charges

12.1. Composition of Charges

The total charges payable for an existing older property are between 7% and 10% of the purchase price. In the case of a new property, the charges are around 3.5%, although VAT on the purchase price is also payable.

Although they are often referred to as ‘notaire fees’ (frais de notaire), in fact the actual fee is only about 1%! The rest comprises registration taxes and disbursements.

A breakdown of total fees and taxes is as follows:

12.1.1 Professional Fees

VAT (TVA) is added to the fee, at the usual rate of 19.6%.

Based on these rates, for a property being purchased for €250,000, you would pay approximately 1% in actual notaire 'fees', and the higher the sale price, the lower the proportionate amount of the fee.

Clearly, there may be other professional fees for you to pay (solicitor, avocat, financial advisor, building surveyor, land surveyor) depending on your circustances. If a land surveyor is required it is not unusual for their fees to be met by the seller.

12.1.2. Disbursements

The disbursements payable by the notaire arise mainly from those associated with land registration, enquiries to the local Council, and to the national land agency (called SAFER). They will normally only total a few hundred euros.

12.1.3. Taxes

Inevitably, the main costs are registration and local taxes.

In the case of a residential property less than 5 years old, and being sold for the first time, VAT at the rate of 19.6% is payable, which is included in the sale price. No registration taxes are payable, other than stamp duty at the rate of 0.7%.

VAT may also be payable on any extensions or annexes which may have been constructed on an older property. This will only apply where the work was completed within the last 5 years, and the property is being sold for the first time since completion of the works. Where this occurs, on the sale of the whole property the separate parts would be taxed differently.

It is also possible for an older property to be considered liable for VAT on first sale within 5 years if the tax authority consider that there has been major reconstruction of the property, which has, in effect, created a new dwelling. This might, therefore, apply in the case of the sale of a previously derelict property, the majority of which had been reconstructed.

In the case of building land the usual registration taxes of 5.09% are payable, but there is no VAT payable for a residential property, although you will pay VAT on the construction costs.

12.1.4. Mortgage Fees

If a mortgage is being obtained for the purchase then you should budget for around 2% of the loan in fees and costs, to include registration costs, the additional professional fees of the notaire (0.26%) and the lenders fee.

12.2. Calculation of Charges

There are a number of automatic calculators on the internet that can be used to obtain an estimate of the fees, taxes and other charges for which you will be liable.

They are not always up to date with their rates, nor entirely comprehensive, but perhaps the best can be found on the site of the Notaires de Paris, which you can find below. In order to use it, you will need some basic understanding of the French language.

Calculate Transaction Costs

12.3. Reducing Charges

There are a three methods that can be used to keep down your transaction costs.

12.3.1. Sharing Charges

By convention, the transaction charges are payable by the buyer but there is no reason why, as part of the negotiations, you cannot agree that they should be shared, or even paid by the seller! It all depends on the strength of your negotiating position.

12.3.2. Estate Agents Commission

It is not unusual for the sale price of the property to include the commission of the estate agent, which is then payable by the purchaser.

This is a method some estate agents use to persuade sellers that they are not really paying the often elevated estate agents fee!

If the buyer is to be responsible for the commission, then the sale particulars must clearly state that this is the case.

It should then follow that the commission is separated out in the sale agreement so that they are not added to the total sale price on which the level of the notaire fees are based.

Estate agents commission can lift substantially the total fees that are payable so ask questions about them at the outset.

12.3.3. Furniture

If you are buying furniture or other effects with the property make sure these are separated out from the sale price of the property as the notaire fees will only apply to the property. Any furniture or effects you are buying will need to be listed on the sale agreement and a value attributed to each item.