What is the sponsorship?
Patronage is defined as "material support provided, without direct compensation from the beneficiary, to a work or a person for the exercise of activities of general interest."
If the central concepts of this definition, - support, absence of counterparties and general interest, retain all their value, the development of patronage in France owes much to the incentives provided by the law of 1 August 2003 on patronage, associations and foundations, and its successive advances.
It results in the donation (in cash, in kind or in competence) to an organization to support a work of general interest. If the beneficiary is eligible for deductible sponsorship, the donation entitles donors (companies and individuals) to certain tax benefits.
Patronage must therefore be clearly distinguished from sponsorship, a term similar to English "sponsoring".
Who can benefit from it?
Before embarking on a sponsorship search process, it should be verified that the organization is eligible for sponsorship, giving the donor a tax benefit.
1. Recipient must be a public interest organization
This condition is met if:
- Thebusiness is not for profit and non-competitive (§80 et seq. BOI-BIC-RICI-20-30-10-10). It is important to note that the subjection of its activity to VAT and other commercial taxes excludes a priori an organization from the scope of eligibility for sponsorship. However, the activity of an organism can be "sectorized". In this case, activities not subject to VAT may be compatible with sponsorship actions. Finally, it should be noted that corporate organizations such as SA, SCOOP, SARL, etc... which are for-profit organizations (in the fiscal sense of the term) are not eligible for sponsorship;
- The management is disinterested ;
On the criteria for assessing the non-profit character and disinterested management of a non-profit organization (including an association law 1901) and on the sectorization of activities, the official bulletin of Public Finance (BOI-IS-CHAMP-10-50-10-20).
- Activity does not benefit not a small circle of people (BOI-IR-RICI-250-10-10,§130 and s.)
2. The work must be of general interest
This condition is fulfilled if the work is philanthropic, educational, scientific, social, humanitarian, sporting, family, cultural or contributing to the enhancement of artistic heritage, the defence of the natural environment or the dissemination of culture, of French language or scientific knowledge.
3. How can I verify that an organization can benefit from deductible sponsorship?
In principle, these are the organizations receiving donations that appreciate whether or not they meet the conditions for receiving donations from individuals. The system is purely declarative.
The delivery of "receipts for donations to works" is therefore their sole responsibility. Only in the context of a tax audit will the tax authorities determine whether the receipt was properly issued.
In the event that a body has wrongly issued a receipt, it incurs a fine equal to the amount of the unduly obtained tax reduction (article 1740 A CGI). On the other hand, taxpayers in good faith do not see their tax reduction challenged.
However, under the law of 1 August 2003, an organization may, if it so wishes, ask the Tax Services Department of the department where its head office is located whether it falls within the categories benefiting from patronage. This request for a “tax rescript” must be formulated in writing, providing all useful elements for assessing the activity of the body.
The purpose of this provision is to ensure greater legal certainty for general interest organizations and donors. The modalities are defined by the official bulletin of Public Finance (BOI-SJ-RES-10-20-20-70).
4. The case of natural persons
It should be noted that natural persons (artists, for example) cannot benefit from sponsorship in direct management of companies or private sponsorship. Nevertheless, they can receive grants from corporate foundations or foundations recognized as being of public utility.
What are the main eligible organisations in the cultural field?
Subject to verification on a case by case basis:
- The State, local authorities and their establishments (see Article 28 of Tax Instruction 4-C 5 04 of July 2004),
- Organizations of general interest (in particular associations law 1901 whose management is disinterested and non-profit and non-competitive activity, and whose activity does not benefit a small circle of people),
- Foundations and associations recognized as being of public utility, and sheltered foundations,
- Corporate foundations (donations from employees of the founding company and employees of the group)
- Endowment funds
- Museums of France (within the meaning of the law 2002-5 of 4 January 2002 on museums of France)
- Most of the private historical monuments (for their restoration work on the protected parts, or their work of accessibility to the disabled),
- Organizations whose management is disinterested and whose main activity is the dissemination of performing arts or the organization of contemporary art exhibitions (excluding incorporated bodies, with the exception of public limited liability companies),
- Certain public or private research or educational establishments approved as being of general interest.
The duty of transparency of beneficiary bodies
The organizations benefiting from donations of natural or legal persons must ensure, under conditions determined by decree in the Council of State, the advertising by any means and certification of their annual accounts above a donation amount of 153,000 euros per year. This provision extends an accounting obligation not only for all associations and foundations, but also for any public body.
The Court of Auditors is now in charge of the audit.
In case of doubt regarding the possibility for an organization to receive donations eligible for tax reductions and to issue tax receipts, it is possible to verify this possibility with the tax authorities.
The possibility of transnational donations in Europe
The amending finance law for 2009, Article 35, amends Articles 200, 238 bis and 885-0 V bis-A of the General Tax Code to extend, under certain conditions, the benefit of patronage to approved bodies whose registered office is located in a Member State of the European Community or in a State Party to the European Economic Area having concluded with France a tax convention containing an administrative assistance clause for the purpose of fight tax fraud or evasion.
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