Measures to Encourage Individual Giving
In France, the legislation encourages donations from individuals through specific measures such as IFI (Real Estate Wealth Tax) deductible donations; dation; reduced inheritance tax for gifts made by heirs to certain organizations; and the temporary transmission of usufruct.
Tax Reduction on Real Estate Wealth Tax (IFI)
Any person liable to the IFI (Real Estate Tax) may make a donation in cash to certain organizations of general interest. This donation may then, subject to conditions, benefit from a tax reduction on the IFI.
The eligible beneficiaries:
Donations made to organizations of general interest, such as Recognized Foundations of Public Utility (FRUP), the research institutions or higher education or non-profit general interest arts education.
Find the full list of eligible beneficiaries here.
Tax reduction: amount and limit
In accordance with Article 978 of the CGI, the taxpayer may claim a reduction in real estate tax (IFI) of 75% of donation amount in cash to the profits of the above institutions and foundations, in the limit of €50,000.
The type of donations
- Gifts in cash
- gifts in full ownership of corporate securities.
An advantageous tax system: dation in payment
Dation in payment is a provision of the General Tax Code (Article 1716a) allowing the payment of his inheritance tax by the delivery to the State of works of art, books, collectibles or documents of high artistic or historical value.
Exceptionally, It now also makes it possible to pay transfer duties free of charge (expenses in connection with an inter vivos donation or bequest) andreal estate tax (IFI) or the right of division (costs related to the division of property in an estate).
Attention: the dation in payment is subject to an authorisation procedure investigated in connection with the tax administration.
Dation in payment was introduced by the law of 31 December 1968 to promote the conservation of artistic heritage. Thus, it allows the State to enrich its public collections and promote the conservation of the national artistic heritage in the territory. It is especially under the impetus of André Malraux, and in anticipation of the succession of Pablo Picasso, that it is conceived. The first great dation received by the State will be that made by the heirs of Picasso in 1979. It will notably allow the creation of the Picasso Museum from works submitted by the artist’s heirs.
Free Transfer Tax Exemption for Manual Donations
Article 757 of the General Tax Code (BOI-ENR-DMTG-10-20-20 § 20)
A manual donation is a donation of a movable property made by hand. Cto a body of general interest, he is then fully exempt transfer duties free of charge.
Reduced inheritance tax for gifts made by heirs to certain organizations
In an estate, if an heir consents to gifts certain bodies of general interest, the State, the local authorities or their public institutions, it may, subject to conditions, benefit from an abatement equal to the amount of the grants granted (Article 788 CGI).
The value of the donated property, and therefore of the allowance, corresponds to the value of the property received from the deceased, valued on the day of death.
The abatement applies to all estates, regardless of the nature of the property (movable or immovable). This provision applies to the two conditions:
It should be pointed out that this provision cannot be combined with the benefit of the sponsorship tax reduction for individuals (Article 200 CGI)
Temporary transmission of usufruct
Usufruct is the right to use a property and to collect income from it, without owning it.
Individuals who do not wish to permanently divest themselves of their property may then carry out a temporary transfer of usufruct for the benefit of recognised foundations or associations of public utility, higher education or arts institutions, for a limited and limited period.
Thus, for the duration of the usufruct, the income of the donated property benefits the gratified body. This temporarily reduces the donor’s total taxable income. Also where applicable, the donor of real estate is no longer subject to the IFI on the value of the particular property.
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