Press Release: Direct taxation: Infringement proceedings against Germany for its discriminatory depreciation-rules applied to buildings situated abroad

On January 31, 2008, the European Commission formally requested Germany to modify its legislation related to reducing-balance ('degressive') depreciation for wear and tear on buildings. According to German law, reduced balance depreciation is only applicable to buildings situated in Germany. The Commission considers this limitation incompatible with the principle of free movement of capital in the Internal Market. The request takes the form of a ‘reasoned opinion’ (second step of the infringement procedure provided for in article 226 of the EC Treaty). If the relevant national legislation is not amended in order to comply with the reasoned opinion, the Commission may decide to refer the matter to the European Court of Justice.