ECJ-Recent Developments in Direct Taxation 2013

S. 46I. Introduction

The referral of France to the EU Court of Justice to which the 30 May 2013 (IP/13/473) press release relates is the last step in an infringement procedure which was initiated in May 2010 by a Letter of Formal Notice from the Commission and which gave rise to a Reasoned Opinion addressed to France on 16 February 2011 (IP/11/160).

II. The criticism addressed to France

According to the Commission, “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. This results in favourable tax treatment for these investments. By contrast, a French taxpayer who invests in residential property to let in another EU Member State cannot benefit from accelerated depreciation, and hence cannot enjoy these tax benefits. In practice this means that taxpayers investing the same amount in immovable goods abroad would face a higher liability. The Commission considers such provisions to be incompatible with the free movement of capital, a fundamental principle of the EU’s Single Market” (IP/13/473).

France would thus be guilty of an outbound restriction on the free movement of capital con...