Selection of administrative court rulings

Pursuant to article 324 AA of Appendix III to the General Tax Code, as applicable on December 31, 2016, the applicant company is requesting a reduction of 10 % in the rental value of the standard premises, which are allocated to a hypermarket operating under the Carrefour banner, on the grounds that the premises it operates under the Leroy Merlin brand name would be subject to interior fittings of lesser quality, given its sector of activity, than those of a food retailer, the latter being required in particular to equip itself with heavy equipment to ensure compliance with cold chains and the sanitary safety of its products. However, while the company merely produces photographs of its sales area, its premises and the premises used as a comparison are two sales areas fitted out in a similar way, with mostly removable shelving. While it is true that the Carrefour hypermarket has specific shelving to guarantee the cold chain, this does not constitute significant technical resources or fittings of such a nature that a negative adjustment of 10 % should be applied to the rental value of the reference premises in question, as the cold rooms of a hypermarket are weighted, as the Administration argues without being seriously contradicted, as storage space. With regard to the difference in economic situation between the premises to be valued and the standard premises, it is clear from the investigation that they are both located in the same commune and in the same commercial zone on either side of Avenue Victor Bordier, with the same access roads. Each also has its own dedicated covered and uncovered parking area. It follows that the tax authorities were right to refuse to apply a negative adjustment of 10 % for this reason, pursuant to article 324 AA of Appendix III to the CGI in the version applicable at December 31, 2016. Finally, with regard to the difference in surface area between the two premises, that devoted to their main activity is close, their weighted surface areas excluding parking being 15,569 sq.m for the Leroy Merlin premises and 13,702 sq.m for the standard premises. What's more, although these two establishments are not located in the same sector for the purposes of applying the new provisions for assessing the rental value of business premises, falling within sectors 3 and 4 of the municipality, their rates per m² are very similar, the former being 126.5 euros and the latter 123.6 euros. Thus, this circumstance alone is not such as to reveal the existence of a difference in commercial potential and, consequently, a difference in situation, between the standard premises in question and the building operated by the applicant company. It follows that the tax authorities were right to refuse to apply a negative adjustment of 10 % for this reason, pursuant to article 324 AA of Appendix III to the CGI in the version applicable at December 31, 2016.

The applicant company argues that comparison term no. 3 proposed by the tax authorities cannot be used, as its own assessment of its rental value is irregular. However, it is clear from the investigation, and in particular from the Villeneuve-la-Garenne municipality's ME report, that this standard premises has a weighted rental value per m² of 107 francs (16.31 euros) and a total rental value of 429,707 francs. However, while the accompanying calculation sheet may appear ambiguous, also mentioning a valuation by comparison with a standard premises no. 87 with a unit value of 101 francs, resulting in a cadastral rental value of 404,100 francs for a weighted surface area of 4,001 m², the latter clearly points out that the total rental value, like the unit value, which was finally adopted was not based on a comparison with another standard premises, but on the rental price, the declared net rent being 429,707 francs and the weighted surface area 4,001 m². Consequently, in these particular circumstances, as the rental valuation was not contested, the rental value of standard premises no. 3 in the ME report for the municipality of Villeneuve-la-Garenne must be considered as having been duly established in accordance with the rules set out in article 1498 of the CGI, which was applicable at the time. In addition, in order to determine the rental value of the disputed property, which it set at 19.50 euros per m², the Administration applied a positive adjustment of 20 % to the rental value of the aforementioned standard premises no. 3, pursuant to article 324 AA of Appendix III to the CGI as it stood on December 31, 2016. In this respect, it points out that this standard premises, built in 1969, is in a good state of repair and has an actual surface area of 5,167 sq.m. While its geographical location is more favorable than that of the premises to be valued, it is smaller (the premises to be valued being 7,317 sq.m.) and less modern in design, as the applicant's clinic was built in 2016. In these circumstances, in view of the larger surface area, the more modern design of its construction and its better state of maintenance, and despite its less favourable geographical location, the tax authorities were right to apply a positive adjustment of 20 % to the rental value of the standard premises in order to determine that of the premises in dispute pursuant to article 324 AA of Appendix III to the CGI in the version applicable on December 31, 2016. However, it is not disputed that the rental value thus retained by the tax authorities in their statement of defence is lower than the unit rate they initially applied.

Pursuant to article 324 AE of Appendix III to the CGI, the cost price to be taken into account for the application of article 1499 of the same Code is the original value for which the fixed assets must be entered in the balance sheet. While the applicant company maintains that the value of the items on its balance sheet could not be taken into account in their entirety on the grounds that certain assets were old, fully depreciated, had the nature of equipment outside the scope of property tax on built-up properties or were exempt, In support of this general assertion, it does not provide any details or justification that would enable its validity to be assessed, whereas the Administration argues, without being challenged, that the fixed assets in question, entered in the accounts by the applicant company, have been valued in accordance with the provisions of article 324 AE of Appendix III to the CGI. Consequently, the argument based on an error in determining the rental value of the assets constituting the tax base must be rejected.

The applicant is contesting her liability to property tax on built-up properties for the year 2022 in respect of three lots she owns, on the grounds that they are non-taxable «to-be-built» lots. However, it is clear from the documents produced by the tax authorities that these lots must be assessed as built outbuildings used as parking lots and garages. It is clear from the auction judgement of the Albertville District Court of April 19, 1988, confirmed by an amending certificate of October 11, 1988, from the real estate certificate drawn up on the death of Mr. B on March 1, 2012, and from the mortgage records, that lots no. 77 and no. 78 are garages, and that lot no. 79, acquired by deed on December 30, 1988, is a parking lot. The certificate issued by the condominium manager and relied on by the applicant does not call into question the information contained in the real estate register or in notarized deeds. Consequently, the tax authorities were right to tax these three lots as built outbuildings within the meaning of article 324 G of Appendix III to the General Tax Code.

Pursuant to the provisions of I, 1. of article 1517 of the CGI, the tax authorities noted that the heating equipment in the home owned by the applicant company had not been taken into account when determining the rental value of the property renovated in 2012. The «heating» comfort element was included in the valuation of the property as from 2022, leading to an increase in the surface equivalents provided for in article 324 T of Appendix III to the CGI, resulting in an increase in the weighted surface area of this dwelling and, consequently, a rental value higher than that determined the previous year, which caused the increase in the property tax assessment on built-up properties compared with 2021. The applicant contests the fact that the tax authorities consider that the dwelling is heated by a wood-burning stove installed in the kitchen, with no heat distribution network in the other rooms of the house, which are equipped with auxiliary convector heaters connected to electrical outlets. This qualification is the reason for the increase in the weighted surface area used to calculate the rental value of this property. However, contrary to the claimant's assertion, a heating system using electric convectors installed to heat living quarters and ensure a suitable temperature in the various parts of the dwelling can be assimilated to a central heating system within the meaning and for the application of the aforementioned article 324 T, without the need for a fixed installation or the existence of a distribution network. As a result, the Administration was right to increase the total weighted surface area by 2 square meters due to the presence of such equipment.

It is clear from the investigation that the building materials wholesaling activity carried out on the applicant company's premises falls into category DEP2, which covers «All warehouses or hangars used to store goods», and in particular «Wholesale warehouses». Since the company's wholesale activity involves the sale of materials, and not the storage of materials deposited on site for warehousing, the applicant is not entitled to claim that its premises fall into category DEP1, which covers «Land used commercially as open-air storage sites: waste disposal sites, junkyards, miscellaneous materials storage sites», on the grounds that the surface area allocated to open-air storage of marketed materials is larger than the covered part. In this case, the applicant cannot usefully rely, in support of its argument, on the reasons given in exchanges with the Drôme property tax department to determine the category of attachment, based on a factual assessment of the declarations filed, when the department did not have all the information it needed to give an opinion on the activity actually carried out on the site. Consequently, the argument must be rejected. In addition, the company has no grounds for contesting the surface area of the site in dispute and the covered surface areas of the building corresponding to the sales warehouse and the annexes retained, as well as the uncovered materials storage and warehousing areas entirely dedicated to the operator's trading activity, determined on the basis of the cadastral plan, when the surface areas shown in its declarations submitted on June 14, 2013 and September 28, 2022 and those shown in the documents produced in support of the latter declaration do not coincide. Lastly, the applicant does not seriously dispute the weighted surface area used by the tax authorities on the basis of the breakdown of surface areas into zones according to the activity carried out, which made it possible to determine the revised rental value of the premises in question resulting from its assignment to the DEP2 category. Moreover, the tax authorities have shown that by classifying the premises as DEP1, as requested by the company, the revised rental values are higher than the revised rental values imposed.