The State encourages the generosity of individuals by granting them a tax boost of up to two-thirds or three-quarters of the sums paid. It is still a tax reduction (and not a tax credit) that only benefits taxpayers. The donor can reduce or even erase his tax by his donations, but does not benefit from a repayment of the State for the sums exceeding the tax to be paid.
A 66% reduction
A donation to a non-profit association gives the right to an income tax reduction equivalent to 66% of the sums paid, within the limit of 20% of taxable income. The surplus can however be carried forward over the following five years. This tax reduction does not enter into the ceiling for “tax loopholes”, limiting tax credits and reductions to € 10,000 per tax household.
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With this mechanism, a donation of 100 € ultimately “costs” 34 € to the taxable donor after taking into account the tax reduction granted the following year. Part of the sum will be paid by the State in the form of an advance advance from January of the year following the donation. The rest will be taken into account in the summer, when last year’s tax is cleared.
A reduction increased to 75%
Some donations are accompanied by even more favorable taxation. With the “Coluche amendment”, introduced in 1989, donations to organizations providing meals, care, or housing assistance to people in difficulty benefit from a tax reduction increased to 75%. With stricter limits.
While it was previously around € 500, the ceiling for these donations has been raised to help associations helping the most disadvantaged, extremely in demand since the start of the health crisis. It was increased to € 1,000 in 2020 and this limit extended until the end of this year. Amounts exceeding this amount give entitlement to the normal reduction of 66%.
The increased tax reduction has also been extended to donations to associations helping victims of domestic violence. A provision taken “on an experimental basis” for the years 2020 and 2021. Finally, donations to foundations recognized as being of public utility allow a reduction of tax on real estate wealth (IFI) of 75% (within the limit of € 50,000. ) as was previously the case for donations deducted from the ISF.
Which associations are concerned
The range of organizations that can receive donations giving rise to the right to tax reduction is very wide, cultural or sports associations, charitable foundations, NGOs or diocesan associations.
Associations are not obliged to request prior approval before receiving donations and to issue receipts allowing their donors to obtain the tax reduction. On the other hand, they must imperatively respect three fundamental criteria engraved in the general tax code: be non-profit; have a disinterested purpose and management; not operate for the benefit of a small circle of people. In terms of IFIs, the list of potential beneficiaries is much more restrictive. It essentially includes foundations recognized as being of public utility, as well as certain organizations, such as universities or research institutes.
What can we give?
The donation of money, by check, bank card or direct debit, remains the most used means but is not the only one that can give rise to the tax reduction. The donation of a work of art, material or real estate can be taken into account. This is also the case for the“Abandonment of income or products”, for example copyright, or the provision of premises. Likewise, volunteers who do not have their costs reimbursed by the association can register this as a donation.
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To be eligible for the tax reduction, a donation must remain a donation. It cannot give rise to a counterpart. However, the tax authorities admit that the donor receives “Small items (badges, decorative stamps, posters, greeting cards, etc.)”. The value of these little thanks must be limited and not “Exceed a quarter of the amount of the donation, with a maximum of 65 € per year”.