In the case of a property sale, the basis of assessment forregistration duty is the price stated in the deed of sale. What happens in the case of a life annuity sale?
Life annuity sales involve a special method of payment, which may give rise to questions about the amount to be taken into account when calculating registration duty.
A life annuity involves the periodic payment of an annuity to the seller throughout his lifetime (or that of a designated third party). The seller, known as the crédirentier, may also receive a fraction of the price paid in cash at the time of the deed of sale. This sum is commonly known as the bouquet.
The parties may also make an estimated declaration, which again must correspond to the market value.
The market value of the property sold as a life annuity must take into account any rights of use and habitation or usufruct reserved by the vendor. A discount may therefore be applied to the property.
In all cases, whether the sale is a life annuity or not, registration duties are calculated on the market value of the property. If the price stated in the deed is lower than the market value, the tax authorities may use the market value as the basis for the registration duties after initiating the rectification procedure.