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French Government Plans Holiday Homes Tax

(c) Sky News 2012

Ministers are poised to challenge a tax grab on British owners of holiday homes in France, it has emerged.

President Francois Hollande wants to hike taxes on foreign-owned second homes as part of his plans to kickstart the nation's faltering economy.

It follows similar proposals, which Britain opposed, made under former president Nicolas Sarkozy, The Daily Telegraph claims.

Tax on rental income would rise from 20% to 35.5%, applied retrospectively from January 1, and capital gains tax on property sales would rise from 19% to 34.5% from the end of this month, it reported.

The Treasury said it had only seen the details of the plan on Wednesday but would challenge it if it was found to go against EU rules.

"We will need to study the details," a source said. "But we will of course challenge any proposal which breaches European single market laws and anti-discrimination rules."