Patronage in kind or competence
One of the possibilities offered to a corporate sponsor is to provide not funding in cash but means (products or services) to the cause it intends to support. This is “in-kind or skill sponsorship”. The eligibility criteria for this form of patronage are exactly the same as those for a cash contribution.
Where donations are made in kind, it is necessary to make use of them:
- for the calculation of the tax reduction reported by the company;
- for the non-reporting of the value of the donation by the company;
- for the preparation of the tax receipt by the recipient organization of the donation;
- for the determination of any consideration given to the company by the recipient organization of the grant.
How to value a gift of property?
In accordance with thesecond last paragraph of 1 of Article 238a of the CGI, the given goods are valued at their cost of production.
The cost of an asset includes the costs incurred by the business to acquire or produce the particular asset (Article 38 of Annex III to the CGI).
- For property acquired for consideration, cost is the purchase price less discounts, commercial rebates and settlement discounts obtained, plus transportation, handling and other costs directly incurred in the acquisition of the goods and borrowing costs.
- For goods produced by the company, cost of production is the cost of production, which includes costs directly incurred for production as well as variable or fixed indirect production costs and borrowing costs.
Property registered in a capital account, the gift must be valued at its disposal value retained for the determination of the capital gain or capital gain on the asset’s exit.
How can we value a donation as a skill-based patronage?
For each employee made available, this donation is valued at its cost, namely sum of his remuneration and related social security contributions up to three times the amount of the ceiling referred to inArticle L. 241-3 of the Social Security Code (CSS)€10,284 per month in 2022.
Precautions to be observed for both parties involved in the sponsorship agreement (sponsor and “sponsor”)
- agree on the “competent” contribution: it is necessary to define with the maximum precision the technical characteristics of the competence sponsorship action, according to the projects covered by the convention and their degree of complexity. A list of specifications, as complete as possible, may thus be annexed to the Convention;
- in the case of a person (or loan of labour): agree on a list of persons serving the sponsorship project and jointly agree on the days worked by the persons;
- in the case of a gift of goods, have a schedule for the delivery of the goods or services and pay attention to any contractual or regulatory guarantees (for example, a ten-year guarantee) that must be recalled in the contract document.
What’s New 2022
Following the adoption of the law of 24 August 2021 consolidating respect for the principles of the Republic, the tax authorities recalled that the promotion of the gift is the sole responsibility of the sponsoring company gifts in the form of goods (such as food donations), services or personnel. A new tax receipt template was published June 10, 2022.
The tax receipt issued by the recipient organization must indicate (§90 of the BOI-BIC-RICI-20-30-10-20):
- the identity of the beneficiary;
- the identity of the patron;
- the date of the donation being that it is possible to issue a receipt for several instalments over a given period;
- a complete description (nature and quantities) of the goods and services received;
- the valuation of goods and services received;
- the breakdown of employees made available.