Temporary transmission of usufruct
Individuals who do not wish to permanently divest themselves of their property may make a temporary transfer of usufruct for the benefit of foundations or associations recognised as being of public utility, institutions of higher education or arts (or cultural or charitable associations in Alsace-Moselle).
This temporary transfer may relate to the usufruct of a portfolio of securities, an immovable... etc. The administrative instruction of the 6 November 2003 (opposite) has just clarified the conditions allowing the temporary transfer of usufruct in full tax security.
Related documents : BOI 7 S-4-03 no. 176 of 6 November 2003
Example
Mr. and Mrs. X have assets of €6,900,000 as of January 1, 2008. They must pay an SFI of €66,870 and are liable for income tax at the marginal rate of 48.09%.
The persons concerned transmit the temporary usufruct to a foundation, under the conditions described opposite, for a period of 5 years, of a portfolio of French shares of €100,000 which provides them with €3,000 of financial products.
Taxpayers are therefore giving up 3,000 euros of income, but also realize a tax gain of 2,414 euros broken down as follows:
€1300 SFI (100,000 x 1.3%) and €1114 income tax
3,000 + 1,500 tax credit = 4,500 x 0.4809 = 2,164 €
Social contributions: 10% of 4,500 = 450
IR: 2,164 - 1,500 of tax assets = 664 + 450 of social contributions = 1,114 €