Calculation Of Local Taxes In France Deemed Obsolete

by Ulrika Lomas, Tax-News.com, Brussels

09 February 2009

A recent annual public report published by the Court of Auditors has concluded that methods used to calculate local taxes in France are 'obsolete' and 'unfair'. The Court is advocating an urgent reform of procedures.

According to the report, the cadastral data, still used to determine local taxes in France, dates from the 1970s for developed land, and from the 1960s for non-developed land. The report highlights that such antiquated figures not only serve to portray an outdated image of French living, but also represent a risk for local authority finances.

Referred to in the report as “obsolete” and “unfair”, the cadastral data fails to take account of any modifications or improvements undertaken on property. For example, the tax base of a loft apartment of modest exterior, yet completely – and luxuriously – refurbished inside is lower than the same sized “modest” apartment containing the same number of bathrooms.

Recommending a radical overhaul of existing practices, the Court suggests two possible solutions: either that calculations are determined according to the true economic value of French property, or according to administered value. The court also recommends that procedures are simplified and made more transparent for the taxpayer, whilst guaranteeing stable revenue for local authorities.

Issuing its direct response to the report, and to the Court’s recommendations, French Budget Minister Éric Woerth confirmed that a reform of local taxation will be addressed, as soon as the working party, led by former Prime Minister Edouard Balladur, has completed its work to reform local authorities themselves.

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