The French government is proposing an additional property tax on many retail outlets and warehouses in Ile-de-France to raise money for infrastructure improvements in the region.
The plans, set out in the Finance Bill, have provoked shrill protest from local trade federations including shopping centre, hotel and restaurant lobbies. “In the worst scenario, the new tax could add as much as 10% to rents,” claims Raoul Haucqueville, president of the Conseil National des Centres Commerciaux (CNCC), France’s shopping centres federation. “Moreover, it will also operate unfairly in practice since many small shops in large out-of-town units under single ownership will be subject to the tax, whereas in most cases similar-size premises in town centres will not.”
Ronald Austin, property partner at lawyers Clifford Chance’s Paris office, said: “As currently drafted, the tax will apply to retail premises of 300 m2 or more, and to warehouses of 500 m2 or more, and the tax rates will increase in yearly stages.”
If adopted, the measure is expected to raise some FFr 1.4bn by the time it enters fully into force in 2004, with rates ranging from around FFr17 to FFr 60 per m2, according to the size and type of property concerned. “The tax will be due from the landlord. Whether it can then be recovered from the tenant will depend on the exact wording of each individual lease,” says Austin.
