France Maintains Tax Breaks For Donations

by Ulrika Lomas, Tax-News.com, Brussels

15 September 2010

French Budget Minister François Baroin has confirmed that tax breaks currently applying to donations will not be among those affected by the government’s plans to cut tax shelters in France by EUR10bn in the autumn.

While acknowledging that the government has indeed given the matter serious consideration, Baroin underlined the fact that a firm decision has now been made. Defending the decision, Baroin emphasized that on the one hand the measure serves as a link with social policy, and on the other, there is no return on investment for the donor. The taxation of donations is therefore set to remain at the current level, Baroin declared.

It appears that the government does not entirely consider the measure, enabling individuals in France to reduce their wealth tax by up to 75% of the sum donated, to be a tax break (niche fiscale). The measure nevertheless represents a shortfall in revenue for the government estimated at around EUR960m.

Baroin’s latest announcement was greeted enthusiastically by French Youth Minister Marc-Philippe Daubresse, and also served to reassure non-government organizations in France (NGOs). NGOs have been concerned about the effect of removing the tax benefit, fearing a decline in the number of donors.

Jean-Louis Vielajus, President of Coordination SUD, a federation which was set up in 1994 to coordinate the activities of NGOs in France in the area of emergency aid and development, had warned the government not to penalize the generosity of taxpayers. Donations in France currently amount to around EUR3bn a year and allow NGOs to provide vital international aid.

Budget Minister Baroin also confirmed recently that any tax breaks currently benefiting France’s most vulnerable individuals and families will be spared from the EUR10bn tax shelter cuts.

Baroin is due to present the country’s 2011 finance bill to the council of ministers at the end of September. The EUR10bn cuts in tax breaks form part of the government’s plans to reduce the budget deficit to 6% of gross domestic product in 2011, from a record 8% this year. The government aims to reduce around 20 tax breaks in a general paring down.

Recommended