French wealth tax reductions : Making a donation to an association allows you to benefit from a 75% tax reduction on the IFI! For example, if you donate 5,000 € to an eligible organization, you will only pay 1,250 € (5,000- (5,000*75%:3,750)).
Which taxpayers can benefit from this tax reduction?
Article 978 of the CGI establishing the scheme does not mention any requirement for tax domiciliation in France. As a result, all IFI taxpayers, whether resident or non-resident, can benefit from the donation tax reduction.
French wealth tax reductions : Which organizations are eligible for this tax reduction?
These are the bodies listed in Article 978 of the General Tax Code.
This list is exhaustive: it is, therefore, advisable to check in advance and to verify that the chosen organization is eligible. Indeed, some associations, although recognized as being of public utility, do not meet the criteria of Article 978 of the CGI.
Here is the list of organizations concerned by the IFI reduction (extract art 978 of the CGI):
- public or private research, higher education or artistic education establishments, public or private, of general interest, non-profit-making, and consular higher education establishments;
- Foundations recognized as being of public utility, which makes available a patrimony in the service of a cause of general interest (e. g. the Abbé-Pierre Foundation, the Salvation Army, etc.);
- integration companies and temporary work integration companies;
- intermediary associations that help people with social and professional difficulties to find work and return to work (e. g. Ardie Fédération Francilienne des associations intermédiaires);
- workshops and integration projects offer activities and professional support to people with social and professional difficulties;
- companies adapted to people with disabilities;
- groups of labor employers who benefit from the GEIQ label; of the National Research Agency; university foundations and partnership foundations;
- associations recognized as being of public utility for financing and supporting the creation and takeover of companies.
Please note that accredited organizations whose registered office is located in a Member State of the European Community are equally recognized.
Some European bodies have been previously approved by the Tax Administration.
We invite you to visit https://www.impots.gouv.fr/portail/liste-des-organismes-europeens-agrees for a list of these organizations.
French wealth tax reductions : The amount of the reduction
The tax reduction amounts to 75% of the amount of eligible donations (in cash or securities).
The maximum tax deduction is €50,000, which corresponds to a maximum donation of €66,670.
The undeducted excess for the tax year will not be refunded and cannot be deducted in the following year.
Dates to remember and nature of the donation
“Donations eligible for the IFI reduction are those made from the day following the deadline for filing the IFI return for the year preceding the year of taxation until the deadline for filing the same return for the taxation year,” says Lexis Nexis’ jurisClasseur. Consequently, donations made just before the end of the tax period are still valid and qualify for a tax reduction (see proof of donations according to the method of payment). Donations eligible for a tax reduction may take the form of a cash payment (cheque or cash) or a transfer of title.
The organization receiving your donation will have to issue you a certificate mentioning in particular:
- the name and address of the recipient organization;
- the activity of the beneficiary organization;
- the surname, first name, and address of the donor;
- nature (cash or title), the form, i.e. whether it is a manual donation, by authentic instrument or by private deed, the method of payment (cash, cheque, transfer, direct debit, credit card), the date and amount of the donation.
It is important to keep this certificate in order to assert your rights in the event of a tax audit.
You are fiscally domiciled outside of France (non-resident in the sense of the tax regulations) but are liable for the IFI on your real estate assets located in France, with a net value of 6 million euros.
The estimated amount of your IFI for the year 2022 is €48,190.
To benefit from a tax reduction for the year 2022, you wish to make a donation to an eligible association in the amount of €40,000.
40.000 x 75% = 30.000 €. You will benefit from a tax reduction of €30,000 on the amount of your IFI.
Calculation of the remaining IFI due = 48.190 € – 30.000 € = 18.190 €.
The maximum amount of deductible donation that it will be possible to make will be 64.253 euros because (64253*75%=48.190 euros)
Déborah Zerbib has several years of experience in the field of personal and international taxation after a Master II degree specialized in tax law.
Cabinet Roche & Cie, Chartered Accountant in Lyon, France.
Specialist in non-residents’ real estate taxation.