Fitch warns of legal battles over French tax change

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Ratings agency Fitch has warned that there could be a series of legal disputes if the French government goes ahead with its planned Infrastructure Tax.

Infrastructure firms raised concerns when the draft finance law for 2024 (PLF 2024) was presented to ministers in September, with Vinci arguing the introduction of the tax would result in an additional charge to its business of about €260m based on the fiscal year 2022.

According to the draft law, a 4.6% charge on revenue above €120m generated by long-distance transport infrastructure assets in France would be imposed from 2024 - and would be added on top of corporation tax.

Fitch has now warned that the tax has the potential to result in legal challenges, with a number of concessionaires indicating that they will appeal against the tax.

The ratings agency estimated that the tax would add around 0.1x-0.2x of net leverage across the French rated infrastructure issuers.