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French Property Tax Rules Under Fire

by Ulrika Lomas, Tax-News.com, Brussels

03 June 2013


Allegedly "discriminatory" tax rules on new residential property have resulted in France's referral by the European Commission to the European Court of Justice.

According to the Commission, French provisions are incompatible with the free movement of capital, which it says is a fundamental principle of the European Union's (EU) Single Market.

Under French tax law, accelerated depreciation can be applied to new residential property in the country that is intended to be let for a minimum of nine years. By contrast, there is no comparable provision for a French taxpayer investing in a residential to-let property in another EU member state.

The Commission claims that, in practice, this means that taxpayers investing the same amount in immovable goods abroad would face a higher tax liability.

The Commission formally requested in February, 2011 that action be taken to ensure France's compliance with EU law. No legislative amendments have been made to date, and the referral to the Court of Justice represents the last step in the Commission's infringement procedure.

TAGS: compliance | tax | investment | European Commission | tax compliance | property tax | tax incentives | law | tax rates | France | tax breaks | tax reform | European Union (EU) | Europe

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