The European Commission has sent Germany a reasoned opinion, the first stage of an infringement procedure, concerning the country’s legislation in relation to the set-off of losses incurred outside the home Member State. Under German law, a natural or legal person can set-off losses from the rental of property situated in another Member State only against income from rental of property situated in that Member State, but not in their home Member State. According to the Commission, this limitation is an obstacle to establishment in another Member State and to the free movement of capital. If Germany fails to amend its legislation within the time limits determined by the Commission, the Commission can bring Germany before the European Court of Justice.