The European Court of Human Rights ruled on Thursday that France had violated the religious rights of Jehovah's Witnesses by demanding over €57.5 million in taxes the church says it is exempt from paying.
France considers Jehovah's Witnesses a dangerous sect and ordered it in 1999 to pay back taxes on donations it received between 1993 and 1996 from its members, who number about 250,000 in France, Reuters reports.
The Strasbourg-based court said the tax bill would deprive Jehovah's Witnesses of most of their funding in France - effectively denying it the means to exercise their faith.
"There had therefore indeed been interference in the applicant association's right to freedom of religion," it said in its decision, which France can appeal.
The court delayed any decision on damages, asking both parties to try to agree on a settlement.
The church brought the case to the European Court after its appeal against the tax ruling was refused by France's highest administrative court.
The court did not comment on the tax-exempt status of Jehovah's Witnesses, which France says they do not qualify for, and based its ruling on what it saw as a misapplication of French tax law.
Jehovah's Witnesses are a millenarian movement that believes Jesus Christ will return to Earth to defeat evil in an apocalyptic battle and then reign for 1000 years.
Founded in the United States in the 19th century, the church has operated in France since 1900 as a religious association but ran into problems after a parliamentary commission declared it a sect in 1995.