The natural or legal person, who carries out purchase operations with a view to the resale of buildings, in a habitual and repetitive manner, within the framework of his main profession, has the quality of merchant of goods. In addition, any person who, in a private capacity, carries out several operations of purchase and resale of buildings, with a speculative purpose, can also be considered as having an activity of merchant of goods.
Two conditions are therefore required to be qualified as a merchant in goods: a speculative intention and a condition of habit. Resale profits, made by taxpayers qualified as merchants in goods, are taxed in the category of industrial and commercial profits (BIC), while their operations fall within the scope of VAT.
In this case, SCI L has been the subject of an accounting audit, for the period from January 1, 2012 to July 1, 2015, in terms of industrial and commercial profits and VAT. Following this control, the administration considered that the resale, on March 31, 2015, of two building plots, acquired on July 13, 1978 and June 12, 1981, constituted a commercial transaction of goods dealer subject to VAT. . At the same time, the declared income of the SCI’s partners was subject to a control after which the administration questioned the absence of declaration of the share of the SCI’s BICs, and subject to consequence each of the partners to an additional contribution of income tax. Mr. and Mrs. D, contesting their status as property dealers, brought the dispute to the Administrative Court of Nîmes which rejected their request. They appealed to the Marseille Administrative Court of Appeal which, in a judgment n ° 20MA00416 of July 1, 2021, ruled in their favor.
Regarding speculative intent, the Court recalls that the SCI proceeded with the acquisition of two building plots on July 13, 1978 and June 12, 1981 by making a commitment to make them viable and to build villas there within four years. It notes that the management decisions of the company consisting in entering, in its accounts, the land in stock, in carrying deductible VAT on the deeds of acquisition, in selling on August 3, 2004 a parcel for an amount of 140,000 euros registered in income from the income statement, to rent another part of the land, then to apply for a development permit obtained on January 26, 2012, confirming that the company had intended to develop the land before reselling it. For the Court, the speculative intention of the partners is established on the date of acquisition of the buildings subsequently resold and is not called into question by the circumstances that the resale of the plots took place. after more than thirty years of detention in the context of a sale to a single buyer.
Regarding the usual condition, the Court reiterates that this is assessed in principle on the basis of the number of transactions carried out and their frequency. It notes that the partners of the SCI have not usually engaged in the purchase and resale of buildings. Furthermore, the twofold circumstance that the corporate purpose of the SCI appearing in its articles of association is of a commercial nature and that it has regularly subscribed, in respect of its activity, to declarations of professional results, is not sufficient to characterize this condition of habit.
The Court deduces from this that the usual condition cannot be deemed to be fulfilled and the sale of the building land, carried out on March 31, 2015, cannot be regarded as a commercial transaction of property dealer.