As a regulated profession, the activity of architect is characterized by tax particularities essentially linked to the real estate character of the object to which they relate.
Houdart A&C’s proficiency as a chartered accountant and statutory auditor for architectural firms
With extensive experience as a chartered accountant and statutory auditor for architectural firms of various sizes within our clientele, we offer specialized support that takes into account the specificities of your activity.
Like any entrepreneur, beyond the respect of deadlines and the production of deliverables within your expectations or needs, you expect from your accountant quality advice on account management and optimization of your decision making. You also expect from your statutory auditor, beyond certifying the established accounts, a support in the implementation of business strategies including internal control, and profitability analysis to give you an enlightened opinion on the technical accounting, tax, and social matters.
Houdart A&C’s selected partners are experts in assisting small, medium, start-up businesses, including those of significant size, with a range of accounts, business advisory and support services. They understand architectural practices and the challenges architecture firms daily face, not only in terms of accounting but also research and development, taxation and social matters.
Our employees in the accounting, tax, and social services, supervised by two chartered accountants and statutory auditors, provide advisory services and even handle administrative tasks for some architectural firms, such as settling suppliers’ invoices, processing salary transfers, and monitoring client payments.
Furthermore, we have proven experience in VAT related to services between taxable persons in third countries of the EU, which allows us to assist you with intra-Community architectural services and provide support for the recovery of deductible VAT in a third country of the EU.
Finally, our know-how includes the establishment of payroll for employees of significant-sized architectural firms and we master the specificities of the collective agreement applicable to architectural firms.
The legal, accounting and fiscal characteristics of the architectural profession
The architect, an essential actor of the real estate construction
Architectural firms to which we offers accounting service are involved in various stages of the realization of diverse real estate projects and constructions. These projects may involve building transformation, real estate promotion, institutional project, shopping center developments, or individual accounts. Plans are created using specialized software. Project monitoring can also be carried out on ERP software dedicated to this activity which facilitates the accounting and operational management.
Architects primarily intervene during the initial stages of project conception. This pre-project phase, which is less lucrative, can be economically critical.
Architect, a regulated profession
The architectural profession is regulated, and its practices require registration with the Order of Architects and the appropriate diplomas.
Although there is no legal requirement for an architecture Limited Liability Company (SARL) or One-Person Limited Liability Company (EURL) to be registered with the Order of Architects before being registered at the Trade and Companies Register, it is strongly advised to submit the articles of association to the regional Council of the Order of Architects where the company’s registered office is located for registration.
Indeed, any architecture company must, in order to be included in the register, comply with the provisions of Articles 12 and 13 of the Architecture Law and the articles of association must contain certain specific mentions.
For example, more than half of the share capital and voting rights must be held by one or more natural persons architects or by architecture companies.
Similarly, the admission of a new partner is subject to prior approval by a two-thirds majority vote at the general assembly (Article 13-4° of the Architecture Law).
The Order of Architects suggests the following as the corporate purpose : “The company’s purpose is the practice of the profession of architect and urban planner, particularly the role of project manager and all missions related to the act of building and space layout planning.”
We can help you with the drafting of the articles of association for your architectural firm.
Construction Economist
Some of our client agencies offer the service of Quantity Surveyor, Construction Economist. This service involves preparing preliminary estimates and quotations by studying technical documents and modeling tools. It also involves conducting price studies by estimating the quantity and quality of materials required for the construction site. He will define the technical modalities and processes for financial organization and human resources. This includes establishing a provisional budget and developing technical specifications in order to prepare the requirements specification.
Throughout the project, construction economists advise clients and monitor the progress of the work, ensuring compliance with budget plans and adjusting established specifications if needed.
Services for architects in Social and Business Practice Modes
Tax Regime for Architectural Firms
As a liberal profession, when practiced as a sole proprietorship, an architectural firm is subject to the BNC tax regime (non-commercial profit). The architectural firm can be then subject to the real regime, also known as the controlled declaration regime, or the micro regime if the thresholds are not exceeded.
In a sole proprietorship, the company and the entrepreneur-architect are considered as one and the same person. However, the activity can also be carried out in a company.
The company can then be fiscally transparent, such as an SCP, subject to an option for corporate income tax. Each partner is then taxed at the individual income tax level on their share of the profit, determined according to the BNC regime.
The social regime of the head of the architect company
The structure can also be a commercial business. The taxation of the architecture firm is then governed by the BIC regime but may be subject to either personal income tax or corporate income tax depending on the corporate form and shareholding structure.
Being accompanied by accountants for architects such as Houdart Audit & Conseil ensures strict compliance with accounting, tax, and legal requirements in terms of deadlines and deliverables. Our support also guarantees alignment between the management decisions, the chosen structure for the architectural activity, and the optimization of associated taxation.
The social security regime for the head of company depends on the legal form of practice adopted and his shareholding percentage. As an illustration, he comes under the self-employed regime in the case of a profesional partnership (SCP) or a majority shareholder in a limited liability company (SARL). However, if he is a mandatary of a simplified joint-stock company (SAS), his status is assimilated to that of an employee in terms of social contributions
At this level, our guidance also ensures coherence between management and business decisions, the chosen structure for the architect’s activity, and the optimization of social contributions related to the entrepreneur’s remuneration.
Tax specificities of architectural firms
Multiplicity of VAT rates and regime for intra-community services
As developed hereafter, the activity is also characterized by the multiplicity of applicable VAT rates depending on the nature of the works and the premises to which the services are related.
As a rule, architectural services are subject to the standard VAT rate of 20%.
Article 279-0a of the General Tax Code defines the scope of application of the reduced VAT rate of 10%. It states that the 10% VAT rate applies to works of improvement, transformation, development, and maintenance work on residential premises completed for more than two years. The 10% rate is not applicable when the works constitute more than simple renovation.
Not only must the works be eligible for the reduced VAT rate, but the architect must also hold a mission of execution project management or a study assignment followed by a mission for execution of project management to apply the intermediate rate.
Article 278-0 bis A of the General Tax Code stipulates that, under certain conditions, the reduced VAT rate of 5.5% can be applied to works improving the energy efficiency of residential premises completed for more than two years, as well as to induced works that are inseparably linked to them.
The services of an architect may be subject to the 5.5% rate if the works themselves are eligible for the 5.5% rate and if the architect holds a preliminary study mission or a complete mission.
These rates are valid in metropolitan France and differ in the overseas departments and territories, but the reasoning remains the same.
Intra-Community VAT on architectural services
The VAT applicable to intra-community architectural services does not depend on the status of the client, whether he is liable for VAT or not. This is one of the exceptions to the general principles of VAT territoriality on services.
Indeed, for architectural services in EU countries other than France, as services attached to a building, the territoriality of VAT depends on the location of the building, regardless of the status of the client, liable for VAT or not. This rule, derived from the European Directive on VAT, has been transcribed in Article 259 A, 2° of the General Tax Code. This involves the VAT collection and refund in a third EU country.
Considering the VAT regime applicable to architectural services also developed below in the context of intra-Community services, by calling on service providers, you may be in a position to have VAT deductible rights to assert in a third EU country. Houdart A&C is able to assist you in recovering these deduction rights.
In accordance with Article 259 A, 2° of the General Tax Code, only services related to a property located in France are subject to VAT in France. As with intra-community services, the place of VAT collection depends on the location of the property.
However, analysis of the tax conventions between France and the country where the property is located is necessary to verify the possible application of specific provisions.
VAT on export of architectural services
In accordance with Article 259 A, 2° of the General Tax Code, only services related to a building located in France are subject to VAT in France. As in the case of intra-Community services, the place of VAT collection depends on the location of the building.
However, an analysis of the tax conventions between France and the country where the property is located is necessary in order to verify the possible application of specific provisions.
Usefull links
Common Accounting and Taxation Issues for Architectural Firms
What is the VAT rate and regime applicable to the services provided by an architect?
Under certain conditions, the services related to certain energy renovation works are subject to the reduced rate, while services, improvements, transformations, fitting out, and maintenance works on residential premises intended for private individuals are subject to the intermediate rate, and the full rate applies to the rest of the services.
What is the VAT regime applicable in case of services provided by an intra-community architect?
As a service related to a building, the territoriality of the VAT related to the architect’s services depends on the location of the building, regardless of the status of the client, according to article 259 A, 2° of the French General Tax Code.
What is the VAT regime applicable in case of services provided by an architect to a third party located in a country other than the EU?
As a service provision attached to a building, the territoriality of the VAT relating to the provision of an architect depends on the location of the building regardless of the status of the client, according to Article 259 A, 2° of the French General Tax Code. This applies a property located outside the EU, subject to specific provisions in the tax treaty with the relevant country.
Can an architect be required to record income under the commercial profits regime in a sole proprietorship?
It is specified that activities of real estate management or promotion or property dealers cannot generally be considered as an extension of non-commercial activity. Architects are taxed under the non-commercial profits regime for profits derived from their ancillary commercial activities, provided that the business activity is an extension of the non-commercial activity.
Is it necessary to adopt specific software for the practice of architecture?
The use of dedicated software is not mandatory. However, an ERP or vertical PGI (Integrated Management Software) can be useful for managing various aspects of this activity. Indeed, these software solutions can assist you with:
- Sales management: opportunity tracking, sales tunnel, quotation and order management, progressive invoicing.
- Project management: task tracking, planning, budget monitoring, automatic calculation of profitability by project and by stage ;
- Financial management: KPI monitoring (turnover, margin, expenses, profitability per project), financial projections ;
- Human resources management: staff availability, workload, assignment to a project, scheduling, time recording, payroll, leave, expense reports.
Commonly used software in this sector includes Everwin GX, Kiwili, and Ooti.
What is the collective agreement applicable to employees of an architectural firm?
The national collective agreement for architectural firms dated February 23, 2003 (n°2332) was extended by order of January 6, 2004 published in the Official Journal on January 16, 2004. It entered into force on that date and has been since amended several times by subsequent amendments.
This collective agreement aims to establish the general working conditions and resulting relationships between employers in the architecture and engineering consulting firms subject to regulation as defined by the law of January 3, 1977 on architecture and their employees.
Why choose a chartered accountant specialized in the architectural profession?
Beyond regular accounting and tax compliance linked to regular deadlines, accountants for architects
will be more able to produce the added value you expect as an entrepreneur, in terms of advice, optimization of the tax and social consequences of your cash flow management and remuneration decisions, which must be in adequacy with your choices of operational structure, and to assist you in the implementation of effective internal control system and of efficient digitalized management tools.
