Vat to be paid on advance discount

Hi

Yes, I received the same a couple of days ago

I also purchased on the basis of reduction in initial cost/no rent

I suspect it will have been sent to everyone in the same situation

I have also received a demand. I am not quite clear on what basis. The "rentals" taken off the price was a discount to price and in lieu of receiving rentals which CGH receive and therefore they should pay the VAT on those.  Can we then claim this back from the tax authorities?

I have received a further demand frm CGH to pay VAT on rentals going back to 2012 without any satisfactory explanations as to why these amounts should be paid. Has anyone any clarity on this please?

I have received a further demand frm CGH to pay VAT on rentals going back to 2012 without any satisfactory explanations as to why these amounts should be paid. Has anyone any clarity on this please?

I have also received this and got a very detailed explanation which I must confess is totally confusing. I then formally challenged the payment and have been threatened with a breach of lease and been referred to the CGH legal team which I am now concerned about. I am sure there are a number of owners with the same concern. The issue seems to be related to a change in French law in 2012 and CGH have got to now recover VAT from owners in relation to future rental incomes which we chose to take up front as a deduction on purchase rather than as a yearly income. It also seems that our free weeks which are deemed as a 'rental in kind' have a value that is taxable. I asked for further explanation and have lots of quotes in French from the 2012 law in French which unfortunately are PDFs so I cannot cut and paste.  I hope someone else can offer a better explanation of the French VAT laws it's beyond my comprehension. 

Dear Fellow Leaseback UK Owners

Sadly I think that we have been shafted by this retrospective taxation.  Blame Hollande not CGH - this a clever way of the French government reducing their deficit.

From what I understand we are being charged the VAT on our "free weeks" even if we don't use them to compensate the loss of VAT that the French Government would have recieved if there were paying guests.  To be fair to CGH they are applying the 10% VAT on the rental AFTER the 25% percent reduction that we would enjoy if booking as owners.  What is troubling however is that this rental VAT will increase as our apartments attract higher rents over the coming years.

What I find galling is that we are also being charged VAT on the advance rental which we took to be a reduction on purchase price.  Looking at the small print there is an amortisation of rent and interest that works against us and is now attracting a retrospective VAT charge.

It seems strange that CGH are acting as the tax collector for these two tax grabs.  It should be the French tax authorities which would at least allow us some transparency and the opportunity to offset expenses.  I suspect that the expense of fighting this through the legal system would not be worthwhile.  Also I am keen to maintain a good relationship with CGH who do seem to be a very good management company.

The bottom line for me with this investment was that I missed out on one ski apartment because I dithered and the development that I finally ended up with in Tignes sold out within a short period of time with mainly French owners.  I sort of feel that it must have been a good deal in the long run if the locals are keen to have a piece of the action.

My feeling is that we probably have to grit our teeth and accept this VAT charge but we must be very wary when the lease is up for renewal and make sure that we are well advised at that stage.  This forum will be very useful to share experience.

Regards to all

Duncan

PS are any of you in the CGH Tignes properties???

Thanks very much Duncan for your explanation. I can just about get my head around the VAT on the weeks that we get each year. What I'm struggling to understand is the VAT on the discount on initial purchase. Is that a one-off or an annual charge? Also I sort of thought that the reduction on purchase price more or less equates to the rent on the ' free' weeks that we get each year-ie are we not attracting VAT twice on the same sum?

I'm not desperately literate in accountancy in English let alone French so if anyone has an English appreciation of the CGH statements I'd be grateful.

many thanks.