Company sponsorship: donations to non-profit organizations

Verified 01 January 2024 - Legal and Administrative Information Directorate (Prime Minister), Ministry of Finance

A company can donate to non-profit organizations, which is called company patronage. These donations provide access to a tax reduction. In order to benefit from this tax advantage, certain conditions must be met.

Patronage is a material or financial support brought by a company, without any consideration, to a non-profit-making body for the pursuit of activities in which general interest.

In other words, patronage consists in making a donation to an organization of general interest (e.g. an association) for the conduct of its activities, without expecting an equivalent return.

Warning  

not to be confused with the sponsorship (sponsorship in English) under which the sponsoring company withdraws direct consideration (e.g. advertising) of the sponsored organization in exchange for the support provided. For example, a bakery pays money to a local soccer club in exchange for placing its logo on players’ jerseys or edge banners during games.

The donation may take one of the 3 shapes following:

  • In cash : the company makes a cash donation, either on an ad hoc or repeated basis
  • In kind : the company donates movable property (e.g. food, computers) or real estate (e.g. local)
  • In jurisdiction : the company provides a service or makes its staff available to the organization

For the calculation of the tax reduction, the donor company must valorization gifts in kind or in competence. The goods and services given are valued at their cost of production, i.e. the costs incurred by the company to acquire or produce the given good or service.

Please note

For each employee made available, the production cost is the sum of his remuneration and social security contributions.

In order to qualify for the tax reduction, payments made under patronage must be made tobodies of general interest. In other words, the activities of these organizations must be non-profit making and not to benefit a small circle of people.

These may be the following recipient organizations:

  • Organizations of general interest of a philanthropic, educational, scientific, social, humanitarian, sporting, family or cultural nature
  • Bodies of general interest helping to promote the artistic heritage, to protect the natural environment or to disseminate French culture, language and scientific knowledge
  • Bodies of general interest promoting equality between women and men
  • Foundations or associations recognized as being of public interest
  • Museums of France
  • Public or private higher education or artistic education establishments of general interest, not for profit
  • Consular higher education institutions for their initial and continuing vocational training and research activities
  • Businesses or public or private bodies approved by the Ministry responsible for the budget
  • Public or private bodies whose management is selfless and whose main activity is the presentation to the public of theatrical, musical, cinematographic, audiovisual and circus works or the organization of contemporary art exhibitions
  • Heritage Foundation
  • Forestry management municipalities or trade unions in the context of an activity of general interest contributing to the defense of the natural environment.

Warning  

Donations to natural persons (for example, artists) not open right tax benefits.

Donations may be made to organizations established in France or in an EU countryEuropean Economic Area (EEA).

The company tax cut comes minus the amount of tax due in the year of donation. It doesn't matter if the company is subject tobusiness tax (IS) or to theincome tax (IR).

The rate of reduction varies according to the recipient organization of the donation.

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General case

The company has a tax reduction equal to one of the following amounts:

  • 60% of the amount of the gift for the fraction less than or equal to €2 000 000
  • 40% for the part of the donation greater than €2 000 000

However, the amount of donations used for the calculation of the reduction may not exceed, in any one financial year, a maximum of €20,000 or 0.5% of annual turnover excluding tax of the donor company if the latter amount is higher.

When the limit is exceeded in a fiscal year, the excess of the gift is spread to the maximum over the next 5 years, after taking into account any new donations made during those financial years. The rate applied to this surplus shall be the rate applied to the initial amount.

Example :

1. A company shall make gifts of an amount equal to €46,000 during accounting year N. Its annual turnover before tax is equal to €5,500 000. The ceiling applicable to that financial year is therefore set at 0.5% of its turnover excluding VAT (€27,500).

For this accounting year, the company benefits from a tax reduction equal to 60% of €27,500 (the ceiling) = €16,500 reduction.

Excess donation equal to €18,500 (46 000 - 27 500) can then be taken into account in the next accounting year N+1.

2. In the next financial year N+1, the company shall make donations in the amount of €20,000. Its HT turnover climbed to €8 000 000. The ceiling applicable to that financial year is therefore set at 0.5% of its turnover excluding VAT (€40,000).

For this accounting year, the company benefits from a tax reduction equal to 60% of €20,000 + 60% of €18,500 (surplus from previous year) = €23,100 tax reduction for year N+1.

Not-for-profit organization providing free meals and essentials to people in need

The non-profit organizations concerned are: which carry out the following tasks :

  • Provision of free meals to persons in difficulty
  • Contribution to obtaining housing for persons in difficulty
  • Free provision to persons in difficulty of the following:
    • Care
    • Furniture
    • Kitchen equipment and utensils
    • Materials and equipment for persons with reduced mobility
    • School supplies
    • Clothing
    • Blankets and duvets
    • Sanitary, oral and body hygiene products
    • Hygienic protective products
    • Diaper for infants
    • Products and materials used for incontinence
    • Contraceptive products

The non-profit organizations concerned are: which carry out the following tasks :

  • Provision of free meals to persons in difficulty
  • Contribution to obtaining housing for persons in difficulty
  • Free provision to persons in difficulty of the following:
    • Care
    • Furniture
    • Kitchen equipment and utensils
    • Materials and equipment for persons with reduced mobility
    • School supplies
    • Clothing
    • Blankets and duvets
    • Sanitary, oral and body hygiene products
    • Hygienic protective products
    • Diaper for infants
    • Products and materials used for incontinence
    • Contraceptive products

The company benefits from a tax reduction of 60% of the amount of the gift.

However, the amount of donations used for the calculation of the reduction may not exceed, in any one financial year, a maximum of €20,000 or 5‰ of annual turnover excluding tax of the donor company if the latter amount is higher.

When the limit is exceeded in a fiscal year, the excess of the gift is spread to the maximum over the next 5 years, after taking into account any new donations made during those financial years. The rate applied to this surplus shall be the rate applied to the initial amount.

Example :

1. A company shall make gifts of an amount equal to €46,000 during accounting year N. Its annual turnover before tax is equal to €5,500 000. The ceiling applicable to that financial year is therefore set at 5% of its turnover HT (€27,500).

For this accounting year, the company benefits from a tax reduction equal to 60% of €27,500 (the ceiling) = €16,500 reduction.

Excess donation equal to €18,500 (46 000 - 27 500) can then be taken into account in the next accounting year N+1.

2 In the next fiscal year N+1, the company makes donations in the amount of €20,000. Its HT turnover climbed to €8 000 000. The ceiling applicable to that financial year is therefore set at 5% of its turnover HT (€40,000).

For this accounting year, the company benefits from a tax reduction equal to 60% of €20,000 + 60% of €18,500 (surplus from previous year) = €23,100 tax reduction for year N+1.

File a tax return

Reporting requirements vary according to the legal status of the donor company:

  • Sole trader
  • Business subject to income tax (IR)
  • Business subject to business tax (IS)

Beyond €10,000 of gifts paid in the same fiscal year, the company must make a supplementary declaration.

Sole trader

Company making donations of up to € 10 000

The company must calculate the amount of the tax reduction by means of calculation aid sheet # 2069-M-FC-SD. This spreadsheet is not to be sent to the tax authority.

The company must then submit the form #2069-RCI that summarizes all tax reductions and credits for the fiscal year.

The amount of the tax reduction must be indicated on the supplementary tax return 2042-C-PRO.

These declarations shall be made using one of the online services following:

  • Either via the EDI-TDFC teleprocedure:

EDI-TDFC Teleprocedure

  • Either via the business account of the entrepreneur on the website impots.gouv.fr:

Taxes: Go to your business area

As they are already deducted, the payments are not deductible for the determination of taxable profit.

Company making donations of more than €10,000

The company must calculate the amount of the tax reduction by means of calculation aid sheet # 2069-M-FC-SD. This spreadsheet is not to be sent to the tax authority.

The company must then submit the form #2069-RCI that summarizes all tax reductions and credits for the fiscal year.

The amount of the tax reduction must be indicated on the supplementary tax return 2042-C-PRO.

These declarations shall be made using one of the online services following:

  • Either via the EDI-TDFC teleprocedure:

EDI-TDFC Teleprocedure

  • Either via its business account at impots.gouv.fr

Taxes: Go to your business area

As they are already deducted, the payments are not deductible for the determination of taxable profit.

Moreover, the company that realizes more than €10,000 of donations in the same fiscal year must perform a supplementary statement specifying the following information:

  • Amount and Date donations
  • Identity of the beneficiaries
  • Value goods or services received in return when they exist (e.g. giving money to a book lending association in exchange for a few pounds)

This declaration shall be made in the Annex to the form #2069-RCI, when the declaration of the financial year's results is lodged.

IR BUSINESS

Business making donations of up to € 10 000

The business must calculate the amount of the tax reduction by means of calculation aid sheet #2069-M-FC-SD. This spreadsheet is not to be sent to the tax authority.

This tax reduction may be used by the members in proportion to their shares in the business if they meet one of the following conditions:

  • The partner is subject to business tax.
  • The partner is a natural person participating in the holding.

Then you have to submit the form #2069-RCI that summarizes all tax reductions and credits for the fiscal year.

Declarations shall be made using one of the online services following:

  • Either via the EDI-TDFC teleprocedure:

EDI-TDFC Teleprocedure

  • Either via your business account at impots.gouv.fr

Taxes: Go to your business area

As they are already deducted, the payments are not deductible for the determination of taxable profit.

Business making donations of more than €10,000

The business must calculate the amount of the tax reduction by means of calculation aid sheet #2069-M-FC-SD. This spreadsheet is not to be sent to the tax authority.

This tax reduction may be used by the members in proportion to their shares in the business if they meet one of the following conditions:

  • The partner is subject to business tax
  • The partner is a natural person participating in the holding

Then you have to submit the form #2069-RCI that summarizes all tax reductions and credits for the fiscal year.

Declarations shall be made using one of the online services following:

  • Either via the EDI-TDFC teleprocedure:

EDI-TDFC Teleprocedure

  • Either via your business account at impots.gouv.fr

Taxes: Go to your business area

As they are already deducted, the payments are not deductible for the determination of taxable profit.

Moreover, the business that makes more than €10,000 of donations in the same fiscal year must perform a supplementary statement specifying the following information:

  • Amount and Date donations
  • Identity of the beneficiaries
  • Value goods or services received in return when they exist (e.g. giving money to a book lending association in exchange for a few pounds)

This declaration shall be made in the Annex to the form #2069-RCI, when the declaration of the financial year's results is lodged.

Business to IS

Business making donations of up to € 10 000

The business must calculate the amount of the tax reduction using the calculation aid sheet #2069-M-FC-SD. This spreadsheet is not to be sent to the tax authority.

The business shall attach to its annual income statement, the form #2069-RCI that summarizes all tax reductions and credits for the fiscal year:

  • Either by means of the EDI-TDFC teleprocedure

EDI-TDFC Teleprocedure

  • Either via its professional space at impots.gouv.fr

Taxes: Go to your business area

The parent business of a group must subscribe the tax credit and reduction returns for it and each of its subsidiaries.

As they are already deducted, the payments are not deductible for the determination of taxable profit.

Business making donations of more than €10,000

The business must calculate the amount of the tax reduction using the calculation aid sheet #2069-M-FC-SD. This worksheet is not to be sent to the tax administration.

The business shall attach to its annual income statement, the form #2069-RCI that summarizes all tax reductions and credits for the fiscal year:

  • Either by means of the EDI-TDFC teleprocedure:

EDI-TDFC Teleprocedure

  • Either via its professional space at impots.gouv.fr

Taxes: Go to your business area

The parent business of a group must subscribe the tax credit and reduction returns for it and each of its subsidiaries.

As they are already deducted, the payments are not deductible for the determination of taxable profit.

Moreover, the business that makes more than €10,000 of donations in the same fiscal year must perform a supplementary statement specifying the following information:

  • Amount and Date donations
  • Identity of the beneficiaries
  • Value goods or services received in return when they exist (e.g. giving money to a book lending association in exchange for a few pounds)

This declaration shall be made in the Annex to the form #2069-RCI, when the declaration of the financial year's results is lodged.

Maintain a tax receipt

The company must also be able to provide, at the request of the tax administration, a tax receipt attesting to the reality of the donations.

This receipt is issued by the beneficiary body of the gift. This must complete the form n°2041-MEC-SD.

The recipient organization may establish a single receipt for multiple donations carried out by the same company during a given period (month, quarter, semester or fiscal year of the donor company).

The donor company shall keep these receipts.

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