EU to scrutinise French plans to tax holiday homes
The European Commission said Friday it will scrutinise new French tax proposals targeting non-resident owners of 360,000 second homes to ensure they comply with European law.
France wants to hit absent property owners -- many of them British or Dutch, but also French citizens overseas -- with a new tax equal to 20 percent of the properties' rental value, under a draft law.
Some property dealers questioned whether the measure, designed to cut France's yawning budget deficit by about 176 million euros per year, might breach EU laws intended to ensure the free movement of capital.
"The commission will study the draft law, but we have to examine the wider reality," a spokesman for taxation commissioner Algirdas Semeta told AFP.
"In principle, EU member states are free to set their own taxes.
"Limits must be respected with regard to laws covering the free movement of capital.
"But there is no problem making a distinction between residents and non-residents -- unless their situations are directly comparable.
"France already distinguishes between residents and non-residents, in terms of property income and allowances," he underlined.
The draft, approved by President Nicolas Sarkozy's cabinet on Wednesday, is expected to pass parliament in time to become law in 2012.
The French parliament is due to vote on the tax reform bill in July.
© 2011 AFP