- A company with limited deductions is considering financing the construction of a building with a loan and then selling the usufruct of the building for 30 years to another company within the same group.
- The value of the usufruct will be 97.5% of the construction cost and will allow the deduction of VAT.
- The other company will then lease the building to the first company for 25 years, with the rent equal to the value of the usufruct plus profit.
- This transaction has no other purpose than to gain tax advantage by allowing VAT to be spread over 25 years.
- The authorities consider this an artificial construction with no economic value.
- If the other company actually acted as an intra-group bank and carried out a refinancing operation, the transaction would be treated differently.
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