France offers taxpayers a significant opportunity to support philanthropic causes while benefiting from tax advantages. One of the most attractive mechanisms for donors is the possibility of reducing their wealth tax by making donations to eligible charities. This provision not only encourages generosity, but also promotes social solidarity and the funding of public-interest projects.
The context of the IFI reduction for donations
The Impôt sur la Fortune Immobilière (IFI) is a French tax designed to tax the ownership of real estate assets above a certain threshold. Introduced to replace the Impôt de Solidarité sur la Fortune (ISF) in 2018, the IFI concerns taxpayers whose net real estate assets exceed 1.3 million euros.
Under French tax policy, donations to certain public-interest organizations are encouraged and rewarded. These donations help to support various sectors such as health, education, culture, the environment and social action.
The advantages of the IFI reduction for donations
IFI taxpayers can benefit from a tax reduction on the amount of their IFI by making donations to certain charities. This reduction amounts to 75% of the amount of the donations, up to a limit of 50,000 euros per year.
For example, if a taxpayer makes a donation of €10,000 to an eligible organization, They will be able to deduct €7,500 from their IFI.
Eligible organizations
To benefit from the IFI reduction, donations must be made to eligible organizations. These organizations are listed in article 978 of the French Tax Code.
Please note that this list is exhaustive, so it is advisable to find out beforehand and check that the organization you have chosen is eligible. Many associations, even those recognized as being in the public interest, do not meet the criteria set out in article 978 of the French Tax Code.
List of organizations eligible for the IFI reduction (extract from art 978 of the French Tax Code) :
- Public or private non-profit research, higher education or arts establishments, and consular higher education establishments;
- Foundations recognized as being in the public interest, which make assets available to serve a cause of general interest (exemple : Fondation Abbé-Pierre, Armée du Salut, etc.);
- Integration companies and temporary work integration companies ;
- Intermediary associations that help people in social and professional difficulty to integrate and return to work (example: Ardie Fédération Francilienne des associations intermédiaires);
- Workshops and integration projects offer activities and professional support to people in social and professional difficulty;
- Companies adapted to disabled people;
- Employers’ groups that have been awarded the GEIQ label;
- French National Research Agency;
- Universities’ foundations ;
- Associations recognized as being in the public interest for financing and supporting business start-ups and takeovers.
Donations can be made to organizations located in France or in other European Union countries, provided that the beneficiary organizations are approved by the French tax authorities.
Here is the list of European organizations approved by France: https://www.impots.gouv.fr/liste-des-organismes-europeens-agrees
Practical details
To benefit from the reduction in Real estate wealth tax (IFI) for the current year, the donation can be made up to the deadline for filing the tax return.
Example: If the IFI 2024 tax return is due on May 25, 2024, the taxpayer will be able to make an eligible donation up to this date.
The beneficiary organization must issue a tax certificate stating :
- the name and address of the beneficiary organization;
- the activity of the beneficiary organization ;
- Donor’s last name, first name and address ;
- the type of gift (cash or securities), whether it is made by hand, by deed or under private contract, the method of payment (cash, cheque, bank transfer, direct debit, credit card), the date and the amount of the gift.
It is important to keep this certificate so that you can assert your rights in the event of a tax audit.
Conclusion
The reduction of the Impôt sur la Fortune Immobilière (IFI) tax on donations is a powerful lever for encouraging philanthropy and supporting causes of general interest in France. By offering taxpayers the opportunity to reduce their real estate wealth tax while contributing to the well-being of society, this tax provision encourages civic commitment and solidarity. We therefore recommend that IFI taxpayers take advantage of this opportunity to support initiatives close to their hearts, while benefiting from significant tax advantages.
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