Donations and bequests, instructions for use

We don’t always know it, but France looks like a tax haven for donors. With the many measures put in place over time, France is one of the countries where generosity is most strongly supported by the State.

► What tax boost for donations?

Donations from individuals are eligible for an income tax reduction of 66%, which can even be increased to 75%. It is always a tax reduction which therefore only benefits taxpayers: a donor can reduce or cancel his tax with donations, but he will not benefit from a repayment of the State for the sums. exceeding the tax payable.

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As a general rule, a donation to an association allows an income tax reduction equivalent to 66% of the sums paid, within the limit of 20% of the taxable income. The surplus can however be carried over to the following five years. This tax reduction does not enter into the ceiling for “tax loopholes”, limiting tax credits and reductions to € 10,000 per tax household.

With this mechanism, a donation of 100 € ultimately “costs” only 34 € to the taxable donor, once the tax reduction granted the following year has been deducted. Part of the sum will be paid by the State in the form of an advance from January of the year following the donation. The rest will be taken into account in the summer, when last year’s tax is cleared.

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► Which donations benefit from an increased exemption?

Some donations are accompanied by more favorable taxation. With the “Coluche amendment”, introduced in 1989, donations to organizations providing meals, care, or housing assistance to people in difficulty benefit from a tax reduction increased to 75%.

While it was previously around € 550, the ceiling for these donations has been raisedto help associations helping the most disadvantaged, extremely in demand since the start of the health crisis: it was increased to € 1,000 in 2020 and this limit was extended in the 2022 budget for donations that will be made over the next two years. Sums exceeding this amount give entitlement to the normal reduction of 66%.

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The 75% deduction has also been extended from June 2021 and until the end of 2022 to donations for the benefit of religious associations (within the limit of € 554). This increased rate also applies to donations deducted from real estate wealth tax (IFI), up to a limit of € 50,000, as was previously the case for ISF.

► Which associations can receive donations?

The range of associations that can receive donations giving rise to the right to tax reduction is very wide, encompassing the cultural, sporting and charitable fields, and ranging from NGOs to diocesan associations. All of them need only meet the three criteria imposed by the tax code: be non-profit; have a disinterested purpose and management; not operate for the benefit of a small circle of people.

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In terms of IFIs, the list of potential beneficiaries is more restrictive. It essentially includes foundations recognized as being of public utility, as well as certain organizations, such as universities or research institutes.

► Can we only give money?

The donation of money, by check, bank card or direct debit remains the most used means but is not the only one that can give rise to the tax reduction. The donation of a work of art or material can be taken into account. This is also the case for the“Abandonment of income or products” specifies the tax authorities, for example copyright, or the provision of premises. Likewise, the volunteers of an association who do not have their expenses reimbursed can register this as a donation.

To be eligible for the tax reduction, however, a donation must remain … a donation. It cannot therefore give rise to a consideration. However, the tax authorities admit that the donor receives “Small items (badges, decorative stamps, posters, greeting cards, etc.)” provided that these small thanks do not go beyond ” a quarter of the amount of the donation, with a maximum of € 65 per year ”.

► What is the difference between donation, donation and bequest?

Alongside these daily donations, which the administration designates as “manual donations”, it is also possible to support an association by transferring ownership of property to it by means of a donation or a bequest. The first are done during the donor’s lifetime, the second at the time of his succession.

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If certain conditions are met, these donations and bequests can be totally exempt from taxation. The exemption is granted to associations recognized as being of public utility working in the social, environmental, sporting or cultural field or for the defense of animals. A field that covers most of the major charities.

Religious associations and religious congregations can also benefit from untaxed bequests. Just like the local communities, the university foundations or the grandes écoles, as well as the associations defending the pluralism of the press.

► Who can bequeath their property to an association?

Practice shows that the vast majority of bequests come from people without children. In this case, a testator can decide to bequeath all of his property to an association. On the other hand, in the presence of descendants, it is necessary to respect the hereditary reserve, that is to say the part of the minimum inheritance which must fall to the children (without counting the life insurance which obeys different rules).

The Civil Code fixes this hereditary reserve at half of the patrimony in the presence of a child, at two thirds for two children and at three quarters with three children at most. The remainder constitutes the available portion that the testator is free to allocate as he wishes to his children or to other persons or to an association.

It is possible to bequeath sums of money to associations but also all kinds of goods, such as works of art or jewelry, financial investments or land. But in fact, the legacies received by the associations consist of what represents the bulk of the French heritage, that is to say real estate or life insurance contracts.

► Can we ask for a counterpart?

A bequest to an association can be accompanied by a charge, that is to say a specific request. It can relate to the use that will be made of the donated good or anything else such as donating a sum of money to a loved one or making the donor’s grave regularly flower.

However, these charges must be carefully considered. If they prove to be impossible to comply with or too burdensome for the beneficiary association, the latter risks being forced to refuse the bequest. This is why associations advise potential testators to contact them in order to prepare as best as possible this ultimate gift of bequest.

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