In a case dated 18 April 2017, the Administrative Court of Appeal of Paris reminded that, for the purposes of the annual tax on offices, commercial and storage premises provided by article 231 ter of the French Tax Code (“Taxe annuelle sur les bureaux, les locaux commerciaux et de stockage”), the use of premises must be considered as at 1 January of the year concerned. The Court concluded therefrom that a change of use of the premises cannot be considered effective for tax purposes until the works are fully completed.
In the case at hand, a company holding a long-term lease considered that its office premises no longer fell within the scope of the annual tax on offices on the basis that it had obtained a building permit authorizing the change of use of the offices into housings and that the works had started and were on-going as at 1 January of the year concerned. The company produced, in support of its argumentation, an opening statement of works and, based on the provisions of the Construction and Housing Code, tried to argue that the effective date of change of use was for tax purposes qualified by the works commencement date.
While reaching the same final conclusion than the first instance judges, the Court of Appel of Paris seems to have taken a slightly stricter approach in this case law. Indeed, the first instance judges had based their decision in favour of the tax administration on the basis that the company did not provide evidence that the premises had ceased to be used as offices on 1 January of the years concerned. The Administrative Court of Appeal, for its part, rather puts forward that office premises can only retain their initial qualification until the actual completion of the works resulting in their change of use.