Finance in France: Adding up the costs
In France, you need to take into account costs over and above the sale price of a property, including fees payable to the notaire...
Under French law, every time a property is sold, the buyer has to pay what are commonly known as the ‘notaire’s fees’. What are these for? Although these legal conveyancing fees are referred to as notaire’s fees, the notaire only receives 10% of what is paid. The remainder comprises:
• Taxes that go to the government and various local authorities (approximately 80% of the fees): these are the sums the notaire is required to collect and pay to the government on behalf of his client. They vary according to the type of transaction and the nature of the property.
• Sundry disbursements (10% of the fees): these are sums paid out by the notaire on behalf of his client that are required in order to establish the deed of sale. They are used to pay various third parties who may be involved and/or pay the cost of the various documents, as well as to settle certain specific fees paid on behalf of the client (e.g. Land Registry, mortgage registry, planning documents, etc). These disbursements can vary quite widely from one sale to another.
The notaire’s remuneration
The principal remuneration for the notaire’s work is by fees, at a rate set by decree. These are said to be proportional as they are calculated on a reducing percentage of the sale price stated in the deed, at the following rates:
• 4.784% for sales up to €6,500
• 1.9734% from €6,501 to €17,000
• 1.3156% from €17,001 to €30,000
• 0.9867 % over €30,000.
These fees are subject to VAT. In addition to these come specific fees received by the notaire for carrying out the formalities and other procedures relating to the sale. The notaire’s own fees are based on a decree dating from 8 March 1978. Anybody who so wishes can find out about them, either by asking their notaire, or by consulting the French Official Journal.
Dues and taxes
The dues and taxes owing to the tax authorities form the greater part of the buyer’s fees. They include:
• Either registration fees of 5.09% of the sale price for ‘older’ homes, i.e. built more than five years prior to the date of sale
• Or VAT at 19.6% for new homes, i.e. bought ‘off plan’, or in the case of the first sale of a home less then five years old.
Payment of fees
At the time of signing the deed of sale (i.e. upon completion), the notaire will ask you for a provisional amount to cover the fees. The notaire is required to collect an amount that will be sufficient to cover the various expenses relating to the sale. The amount is calculated by referring to pre-defined tables of fees. This is just an estimate, as the exact amount of certain expenses will not be known until after the formalities are carried out, which will only take place after completion.
After the sale, once all the formalities are finished, your notaire will send you (at the same time as your title deed) a statement of fees showing separately the dues paid to the government and the other sums received on behalf of the notaire’s office. If these turn out to be lower than the amount already paid, your notaire will reimburse any excess.