Yes French tax is complex. I will send you the issue anyway! See below;
A couple- Tom & his wife have an Irish established food company with shops/outlets in Ireland. Tom works for the co. in Ireland. His wife does not.
The co. has taken a lease on a shop premises in France as Tom thinks that there is a market there to sell Irish food from Irish suppliers.
The co. will employ a French person to run the business in France and hopefully this person will expand the business so that other shops can be set up in France and the co. will also employ French staff to work in the French shop.
If the retail outlet in Paris is successful, Tom and his wife may set up a co. in France in 2016 through which the growing business in France would be operated.
The new French co. would be owned by Tom and his wife on a 50/50 basis and the Irish co. would TRANSFER the French operation to the French co.
Tom and his wife feel that if they develop a successful business in France, they are likely to be in a position to sell the business at a substantial profit in the future to one of the large retailers in France.
-Tom and his wife have asked for an outline of the Irish tax issues associated with this proposal, including the timing of the establishment of the French co.
-They also asked for tax advice on whether they should own the French co. directly or whether the French co. and the Irish co. should be part of a group structure.
Many thanks Keith- see vat query
Co. X took a long lease on a shop property 10 years ago in Ireland. The capitalized value of the lease for VAT purposes was €6m 10 years ago.
This was quite a large building so the co. had extra space and let out a quarter of the building to another retail outlet in 2004 for a ten-year period. So this was a letting of a ‘short’ lease.
However, Co. X (the Irish co.) did not waive its exemption from vat on short-term lettings.
So the question is- what vat exposure does Co. X have at this stage in relation to the lease and how should it be dealt with at this stage?