Support for all-tax fraud victims in France will be approved, and the minimum protection mechanism will be established

On the 23rd, Congress, at a plenary session, dealt with legislative amendments aimed at helping victims of full-tax fraud recover in practice and reducing real estate open project permit procedures. The focus of victim support is to address the limitations that cause large disparities in compensation levels depending on differences between auction and public auction outcomes, while legal amendments related to development projects reflect the policy objective of reducing supply delays.

The core of the amendment to the “Special Act on Support for Victims of Full-Tax Fraud and Residential Stability” passed on this occasion is the establishment of a minimum guarantee mechanism. Up to now, in the process of public institutions purchasing victimized houses, by using the difference between the appraised value and the winning bid price (i.e., the auction margin), victims have been able to live free in public rental housing for 10 years, but the actual scale of recovery varies depending on auction conditions. The amendment provides that if the amount recovered by victims after an auction or public auction does not reach one-third of the rental deposit, the state will cover the shortfall as a minimum support payment. This effectively sets, systemically, a lower limit for victims’ recovery.

Support for victims of void contracts has also been strengthened—such as victims of trust fraud where the contractual counterparty lacks legal authority. For these victims, a pay-first, settle-later approach has been introduced: before an auction or public auction, all or part of the minimum guarantee fund is paid first, and after the auction or public auction ends, the state will then conduct final settlement. The purpose is to prevent victims from falling into financial instability due to long waits for procedures. In addition, minimum support payments and prepayments may not be transferred or provided as collateral, and they are also prohibited from being seized. This measure adds a safety mechanism to the support funds to ensure they do not leak away midway and are returned directly to the victims themselves.

The procedures for public institutions purchasing victimized houses have also been adjusted. In auctions of victimized houses involving full-tax fraud, if no bid is declared at the highest price, the system has changed to allow victims, among others, to submit purchase bids with priority using the minimum sale price. Public housing providers are granted the right to apply for postponement or to stop an auction or a public auction, in order to reduce problems of missed purchase opportunities caused by schedule pressure. In addition, even if the victimized house is not purchased through an auction or public auction, relief from acquisition tax can still be applied. Including victims who have had their auction or public auction concluded but were unable to purchase the house as eligible targets for alternative public rental housing support is one of the important changes in this revision.

On the same day, Congress also passed an amendment to the “Real Estate Development Project Management and Related Laws.” As a follow-up legislative measure to the supply countermeasure from September 7 of last year, the amendment newly provides a legal basis for establishing a Real Estate Fast Permit Support Center, and introduces an audit exemption clause to prevent civil servants from bearing excessive audit burdens during the process of carrying out permit support results. Its intent is to reduce delays in housing and various development projects caused by administrative procedure lags, and to accelerate the pace of supply. With respect to the related provisions on improving procedures for purchasing victimized houses involving full-tax fraud and prevention measures, after review by the State Council, they shall enter into force from the date of promulgation; the minimum guarantee system and the pay-first, settle-later system shall apply from 6 months after promulgation. The amendment to the “Real Estate Project Management Act” also enters into force 6 months after promulgation. This policy direction is very likely to continue in the future, aiming to enhance the effectiveness of victim protection while reducing administrative bottlenecks that hinder housing supply.