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France Strengthens Agricultural Donation Tax Break

by Ulrika Lomas, Tax-News.com, Brussels

17 December 2013


French Finance Minister Pierre Moscovici has announced plans to strengthen and to extend the scope of the income tax break accorded to farmers for agricultural donations in kind to charitable organizations in France.

Under existing regulations, agricultural donations in kind are only eligible for the income tax break provided that they are given directly by the farmer to the charitable organization concerned. These "direct" donations enable the farmer to deduct from income tax 60 percent of the value of the gifts.

However, "direct" donations are only actually possible in a limited number of agricultural sectors, notably in the fruit and vegetable sectors, as here the products may be consumed directly, without requiring processing or modification.

Consequently, the Government intends to extend this tax shelter to other farming sectors, using another instrument, the so-called "income abandon" mechanism. Under this mechanism, agricultural producers, such as cereal producers, will be able to pass their products to a "transformer" or intermediary, renouncing or "abandoning" all or part of the product price for the benefit of the charitable organization. In so doing, the donor will be entitled to a 60 percent income tax reduction on the value of the donation, once taxed on actual profit.

According to the French Finance Ministry, the main change is that the income tax break will be extended to include donations of milk products to charitable organizations, even if the donation is first "transformed" by an intermediary company, for example into yoghurt or cheese. Once the farmer has designated the association to which he intends to make the donation, in agreement with the intermediary, the association may then issue a tax receipt to the farmer, giving right to a 60 percent income tax reduction.

TAGS: Finance | tax | tax rates | France | tax breaks | regulation | individual income tax

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