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French Property Tax Rules to be Challenged in the ECJ

The European Commission has referred France to the EU's Court of Justice for what the Commission views as discriminatory tax rules on new residential property. The French rules allow investments in new residential property in France to benefit from accelerated depreciation, but do not allow the same treatment for similar investments abroad.

The French tax provisions allow accelerated depreciation to be applied to new residential property in France which is intended for letting for a minimum of 9 years. By contrast, a French taxpayer who invests in residential property to let in another EU Member State cannot benefit from accelerated depreciation. The Commission considers such provisions to be incompatible with the free movement of capital, a fundamental principle of the EU's Single Market.

The Commission had already formally requested France in February 2011 (IP/11/160) to take action to ensure compliance with EU law. However, no amendments have been made to the French legislation so far.