Checklist for International Buyers: Legal Steps When Buying Luxury Properties in Europe

Hook: Why this checklist matters for U.S. small business owners buying luxury property in Europe

Buying a high-value European home—a renovated villa in Montpellier, a designer’s coastal house in Sète, or a historic apartment in central France—can be a great strategic investment for U.S. small business owners. But cross-border purchases bring concentrated legal, tax and compliance risk: incorrect entity choice, missed taxes and disclosure obligations, or overlooked local restrictions can cost far more than the property itself.

The 2026 context: what’s new and why you should care

Recent developments through late 2025 and early 2026 have accelerated transparency, sustainability and cross-border tax reporting for real estate buyers in the EU. Key trends affecting buyers now:

• Greater beneficial‑ownership transparency: EU member states expanded registries and AML checks in 2024–2025; notarised transactions now trigger stricter Know‑Your‑Customer (KYC) and source‑of‑funds checks.
• Sustainability and energy rules: Energy Performance Certificates (DPE in France) and tighter minimum standards influence value and rentability—some jurisdictions began restricting sales or rentals of the worst‑performing properties.
• Digital closings & e‑sign integration: Notaries increasingly accept electronic documentation and remote identity verification—speeding closings but requiring secure document workflows.
• Cross-border tax rules and reporting: International tax initiatives (including OECD actions rolled out in recent years) and local changes mean tax structuring must be revisited for 2026 purchases.

Who this checklist is for

This guide is written specifically for U.S. small business owners and investors buying luxury European properties (e.g., high‑value listings in France). It focuses on legal, tax and compliance steps you should take pre‑offer, during due diligence, at closing and post‑closing.

Top-level legal & tax checklist (One‑page view)

1. Pre‑offer planning: entity choice, financing, currency strategy
2. Engage local counsel and a notary early
3. Confirm KYC & source‑of‑funds requirements
4. Property due diligence: title, encumbrances, permits, EPC
5. Tax due diligence: VAT vs registration tax, wealth & income taxes
6. Drafting and negotiating the sales contract (conditional clauses)
7. Escrow, deposit and cooling‑off rules
8. Closing: notary execution, tax payments, registration
9. Post‑closing: estate planning, reporting (FBAR/8938), local administration

Step‑by‑step checklist with actionable details

1. Pre‑offer planning: decide how you will hold the property

The ownership vehicle affects tax, privacy, financing and estate planning. Common options include:

• Direct personal ownership—simplest for primary residences; potentially higher inheritance tax exposure and less privacy.
• Local civil company (France: SCI)—popular for French homes to simplify co‑ownership and succession planning; be careful: SCI is transparent for French tax but creates U.S. reporting complexities.
• Foreign corporate or trust—can provide anonymity and liability isolation but may trigger higher tax rates, withholding and complex U.S. reporting (Form 5471, 8858, PFIC concerns).

Actionable: get a cross‑border tax memo comparing after‑tax outcomes for at least two structures—direct individual vs SCI vs single‑member foreign LLC—before making an offer.

2. Financing, currency risk and pre‑approval

If you’ll use a mortgage, seek pre‑approval from a European bank or an international private bank that already serves U.S. clients. Ask about:

• Loan‑to‑value limits for non‑residents
• Interest rate floors and repayment currency
• Early repayment penalties and cross‑default provisions

Actionable: lock a currency hedge or use a forward contract if your dollar exposure could materially affect returns. Document hedging costs in your purchase pro‑forma.

3. Engage your team early: local counsel, notary, tax advisor, surveyor

In France and many European countries, a notary (notaire) is the public officer who finalises the conveyance. Notaries are impartial, handle title registration and collect taxes at closing.

Actionable: retain a local attorney for negotiable contract terms and a notary for the closing. Confirm roles early—your attorney negotiates the purchase agreement; the notary prepares the final deed and registers title.

4. Know the KYC and AML requirements (prepare documentation)

By 2026, banks, notaries and estate agents in Europe expect thorough KYC. Typical documents:

• Passport and proof of residence
• Proof of funds and source of wealth (sale proceeds, business income, loan agreements)
• Corporate documents for entities: articles, beneficial owner register, signatures
• Recent bank references and tax returns

Actionable: assemble certified translations where required and prepare a clear audit trail for your funds to avoid delays in signing or transfer.

5. Property due diligence: what to inspect

Luxury properties can hide structural or legal defects. Complete these checks before removing key contingencies:

• Title search: confirm vendor’s ownership, mortgages, liens, easements and restrictive covenants.
• Cadastral and boundary verification: confirm exact plot size and boundaries with local cadastral maps.
• Planning & building permits: validate that past renovations had permits; check if future works need approvals.
• Co‑ownership documents (copropriété): review minutes, budgets, major works planned, sinking funds and arrears.
• Energy Performance Certificate (DPE) and insulation status: identify future compliance or retrofit costs.
• Historic or protected status: check heritage listings that limit changes.
• Environmental & flood risk: confirm flood zone, soil contamination and insurance availability.
• Technical inspection: structural engineer, roof, HVAC, pool safety and pest reports.

Actionable: make your offer conditional on a complete title and technical due diligence with a defined remedy or exit right.

6. Tax due diligence: upfront & ongoing taxes to model

Model transaction and recurring taxes before the purchase decision. Key items:

• Acquisition taxes: registration duty or stamp taxes and notary fees. In France, buyer costs for existing property typically range from ~6–8% of purchase price (legal/registration fees + taxes); for new builds VAT may apply (~20%) but registration costs are lower.
• VAT vs registration choice: new properties are often subject to VAT; short‑term rentals may trigger VAT obligations in some cases.
• Annual property taxes: taxe foncière and taxe d’habitation (residences for owners less common now) where applicable.
• Income tax on rentals: non‑resident rental income is taxed locally and may require withholding or filing; treaty relief varies.
• Capital gains tax on sale: many EU countries apply non‑resident capital gains withholding or tax; France has specific allowances by holding period but also social contributions for residents/non‑residents—confirm current rates.
• Wealth taxes & local levies: some municipalities impose additional taxes on high‑value or secondary residences (vacancy taxes, surtaxes).
• U.S. reporting: Form 8938, FBAR (if foreign accounts exceed thresholds), and entity reporting (Form 5471/8858) as required. Rental income and capital gains must still be reported to the IRS; foreign tax credits may apply.

Actionable: obtain a cross‑border tax opinion estimating acquisition taxes, annual taxes and exit taxes for each ownership structure you consider.

7. Contract drafting: include protective conditions and timelines

In France the typical pre‑contract is the compromis de vente (or a promesse). Standard protections to negotiate:

• Contingency for clear title and no undisclosed liens
• Technical inspection contingency and liability cap on hidden defects
• Financing contingency with realistic deadlines
• Expiration of offers and deposit amount (usually 5–10%)
• Cooling‑off period details (in France, buyers typically have a 10‑day indisputable right to withdraw after signing a pre‑contract)

Actionable: insist that the contract expressly states which taxes and fees the buyer pays, and include a currency clause if the price is stated in euros but you’re funding in USD.

8. Escrow, deposit & closing logistics

Deposits are normally held either by the estate agent (if regulated) or the notary’s trust account. At closing the notary will collect transaction taxes and register title.

Actionable: wire funds only to the notary’s official escrow account; verify wiring instructions by phone with known contact. Always request a payment receipt from the notary that itemizes taxes and fees.

9. Closing: what to expect on signing day

• Final deed execution in front of a notary (remote e‑sign may be available but confirm identity protocols)
• Payment of balance, taxes and notary fees
• Notary registers title—expect registration timing of days to weeks depending on jurisdiction
• Delivery of keys and inventory (état des lieux) for rented properties or furnished luxury homes

Actionable: obtain certified copies of the deed, a full statement of costs, and the cadastral plan at closing.

10. Post‑closing checklist: compliance and asset management

• Register property for local taxes and set up direct debit for condo fees/taxes
• Open or convert a local bank account for bills, utilities and rental receipts
• Insure the property with an insurer that covers non‑resident owners and luxury items
• File necessary U.S. reports (FBAR, 8938, entity returns)
• Update estate plan: consider a French will or local notarised testament for French real estate to avoid probate complications
• If renting: register for short‑term rental permits, collect tourist tax and comply with local rental rules

Actionable: schedule an annual compliance review with your cross‑border advisor to capture new 2026 rule changes and local tax updates.

Special considerations for France (applies to many high‑value listings)

France remains a top destination for luxury homes. Practical items to flag:

• Notary role: compulsory and responsible for registering the sale and collecting acquisition taxes.
• Typical buyer costs: existing properties—approximately 6–8% of purchase price for taxes and notary fees; new builds—VAT (~20%) may apply but with lower registration fees.
• Compromis de vente & cooling‑off: after signing, private buyers usually have a 10‑day withdrawal window.
• Co‑ownership rules (copropriété): request the carnet d’entretien, last three years of meeting minutes and the co‑ownership budget.
• Forced heirship: French inheritance rules can apply to property situated in France—testamentary planning is essential.

Actionable: for French properties, instruct your attorney to obtain a notaire’s pre‑closing tax estimate (estimation des frais) and confirm whether VAT or registration tax applies.

2026 advanced strategies and future‑proofing

To protect value and minimize compliance surprises:

• Plan for regulatory tightening: expect additional AML checks and possible limits on non‑resident purchases in hotspot markets—maintain transparent ownership structures.
• Factor in sustainability retrofits: properties not meeting minimum EPC standards may incur restrictions or reduced demand—budget for upgrades and secure contractors with EU compliance experience.
• Use tailored holding structures: in many cases an SCI for French property plus a U.S. revocable trust or will provides both tax efficiency and orderly succession, but always confirm U.S. tax reporting impacts first.
• Negotiate seller warranties: on title, permits and tax compliance—these reduce post‑closing litigation risk.

Common pitfalls to avoid

• Assuming U.S. tax residency ends cross‑border obligations—property abroad still triggers IRS reporting.
• Using an opaque foreign company without assessing withholding, local taxes and U.S. reporting (this often creates more problems than benefits).
• Skipping a full technical inspection on a luxury renovation property—designer finishes can mask structural issues.
• Ignoring local rental rules—many European cities limit short‑term rentals or require registration and safety certifications.
• Wiring funds to unverified accounts—always confirm the notary’s official escrow details directly.

Pro tip: For U.S. business owners, integrating the purchase into your overall corporate and estate plan (with input from both U.S. and EU advisors) prevents costly retroactive fixes.

Checklist — Documents & Deliverables (printable)

• Passport, proof of U.S. address, local contact
• Proof of funds and detailed source of wealth
• Corporate documents for entities: articles, ownership ledger, signature spec
• Pre‑purchase tax opinion comparing structures
• Title search report and cadastral map
• Technical/structural inspection reports
• Energy Performance Certificate (EPC/DPE)
• Copies of co‑ownership minutes, budget and works plan
• Notary’s cost estimate and final deed copies

Final actionable next steps (immediately actionable)

1. Contact a European notary and a local real estate attorney to request an initial retainer and scope.
2. Order a pre‑purchase tax memo that compares the likely acquisition and ongoing tax bills for at least two ownership structures.
3. Assemble KYC and certified fund documentation; begin bank and AML checks early.
4. Include the standard contingencies in your offer—clear title, financing, technical inspection and energy compliance.

Closing thoughts

Cross‑border real estate deals in Europe in 2026 demand proactive legal, tax and compliance planning. High‑value properties have high upside but also high regulatory scrutiny. Following a documented checklist—structured around pre‑offer planning, robust due diligence, precise contractual protections, and a clear post‑closing compliance plan—reduces risk and preserves value.

Call to action

If you’re considering a luxury purchase in France or elsewhere in Europe, start with a tailored cross‑border legal & tax consultation. Our directory connects U.S. business owners to vetted notaries, cross‑border tax advisors and bilingual real estate attorneys experienced with high‑value European transactions. Schedule a consultation to get a customized purchase roadmap, a comparative tax memo and a local due diligence checklist for your target property.

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