law recognizes two primary legal forms of not-for-profit,
non-governmental organizations: associations and foundations.
Associations may serve either a private or public benefit.
Public benefit associations fall into one of two categories:
(1) general interest and (2) public utility.
law also recognizes three primary forms of foundations: (1) public
utility foundations, (2) sheltered foundations, and (3) corporate
foundations. Four other forms of foundations also exist but are not
frequently created: research foundations, partnership foundations,
university foundations, and scientific cooperation foundations.
foundations are all subject to different regulatory regimes; for
example, only commercial entities may found a corporate foundation.
All foundations must serve a public benefit purpose.
unions, religious organizations, and political parties also qualify
as not-for-organizations (NPOs), though their limited interaction
with U.S. grantmakers places them outside the scope of this Note.
NPOs may receive donations, grants, and other contributions (with the
exception of "contractual donations") without incurring
any income tax liability. VAT exemptions are provided for specified
types of activities or goods. A reduced VAT rate is applied to
certain goods, including medicine, pharmaceutical products, and
equipment for handicapped individuals.
foundations, except for corporate foundations, are entitled to tax
credits for their donations to NPOs with general interest or public
utility status. Legal entities may receive tax credits worth up to
0.5% of their annual income for donations, while individuals may
receive tax credits worth up to 20% of their annual taxable income
donations, which are grants or conditional gifts that impose certain
obligations on the recipient, are subject to a special levy. Only
certain types of organizations may receive contractual donations, and
of those eligible, only certain ones are exempt from paying tax on
on Associations of July 1, 1901 ("Associations Law");
of August 16, 1901 on Regulation of Public Administration for the
Implementation of the Law of July 1, 1901 on Association Contracts
("Implementation Decree of the Associations Law");
No. 87-571 of July 23, 1987 on the Development of Philanthropy ("Law
on Philanthropy Development");
or more persons may create an association for any legal activity
except for the "sharing of profits" (Article 1,
Associations Law). To acquire legal personality an association
must notify the relevant prefecture (territorial sub-division of the
central government) of its existence. 
As discussed in the section on Public Benefit Status (Section III
(B)), associations may seek general interest or public utility
are now approximately 1,200,000 registered associations in France.
to the July 23, 1987 Development of Philanthropy Act, as modified by
the July 4, 1990 Corporate Foundations Act, "a foundation is
the deed by which one or several persons decide to assign irrevocably
some goods, rights, or resources to the fulfilment of a public
interest and not-for-profit purpose."
have their own patrimony, an attribute that distinguishes them from
associations, which are simply groupings of individuals or legal
entities with a common goal. As all foundations must serve a public
benefit, private interest foundations are not permitted.
Development of Philanthropy Act and Corporate Foundations Act define
three primary types of foundations:
other types of foundations are less common. These foundations were
recently created by law, and the publication of related decrees that
would govern them is pending.
Cooperation Foundations; and
addition, Law No. 2008-776 of August 4, 2008 created "endowment
January 4, 2002 Act on the Museums of France, the August 1, 2003 Act
on Philanthropy, Associations and Foundations, and the Conseil
d’Etat’s (the highest
administrative court) implementation of standard by-laws for public
utility foundations have all contributed to a more flexible process
for creating and administering foundations.
Public Utility Foundations
reconnues d’utilité publique)
or more persons or legal entities may create a public utility
foundation. Foreigners may also create a public utility foundation;
their legal capacity to do so depends on the domestic law of their
country of origin and not French law.
French law requires a
public utility foundation to have an endowment sufficient to fulfil
its purpose.  This endowment may be
created by a donation or legacy, and contributions to the endowment
may be made in instalments over a five-year period.
law also requires that foundations be not-for-profit and apply their
assets in a manner that serves the general interest. The concept of
general interest refers to benefits conferred upon an entire
community, on issues concerning public health, environment,
philanthropy, and others (for more details see section B.1 below). To
qualify for recognition as a public utility, foundations must receive
approval from the Conseil
and the Ministry of the Interior. Once the Conseil
has reviewed the application, it sends an opinion to the Prime
Minister, who publishes a Decree recognizing the organization as a
public utility. A public utility foundation must receive approval
from the Conseil
before amending its charter or dissolving and distributing its
are approximately 1,500 public utility foundations.
abritées or sous égide)
sheltered foundation is a foundation that operates under the aegis of
a public utility foundation. Also referred to as a "non-autonomous"
foundation, sheltered foundations do not have their own legal status;
instead they are hosted by another institution. Sheltered foundations
have the advantage of being exempt from minimum endowment
requirements and annual funding commitments required by law.
Sheltered foundations, however, have to depend on their host
institution to manage their assets. A sheltered foundation has its
own board that includes a minority of representatives from the host
institution, and makes decisions concerning grants and operations.
Two institutions are able to host non-autonomous foundations in
Fondation de France
and the Institut
de France, but
many others have been set up – approximately thirty to date.
Commercial entities, including public or private companies,
mutual societies, cooperatives, and others, are the only institutions
that may found a corporate foundation (Article 19, Law on
Philanthropy Development). A corporate foundation must have a general
interest objective and is ineligible for status as a public utility
Corporate foundations must be established for
a minimum period of five years (Article 19-1, Law on Philanthropy
Development). The founders may extend this period for an additional
minimum period of three years, but it is unclear if a second
extension is permitted. To create a corporate foundation, the charter
must contain a multi-annual action program designed to achieve a
public benefit purpose, and the founders have to contribute to the
endowment in instalments that correspond with the program ("plan
Corporate foundations must indicate in a fixed decree the amount of
funding, which must be greater than €150,000, dedicated to their
long term program (Decree September 30, 1991, Article 7, modified
decree July 11, 2002). The founders may contribute the amounts to the
foundation in instalments made over a period of five years.
there is more than one founder, individual contributions do not need
to be equal.
Employees of the founding commercial entity are
the only eligible donors to a corporate foundation, which is
prohibited from receiving a legacy or any donations from the general
are approximately 270 corporate foundations.
of the writing of this Note, the legal and tax framework for research
foundations is not yet codified.
foundations are governed by the rules applicable to public utility
foundations with certain specificities. A research foundation’s
purpose can include:
scientific information; and
foundations are financed with public funds which can represent up to
50% of their endowment.
foundations were implemented by Law No. 2007-1199 of August 10, 2007
on Rights and Responsibilities of Universities. Article L719-13 of
the Education Code states that public institutions with scientific,
cultural, and professional purposes can create, in order to fulfil
one or several activities of general interest in compliance with the
purpose of the institution, a not-for-profit making legal entity
called a partnership foundation.
foundations are subject to the rules governing corporate foundations,
but they have a broader legal capacity as they can receive legacies
foundations were also implemented by Law No. 2007-1199 of August 10,
2007 on Rights and Responsibilities of Universities and Decree No.
2008-326 of April 7, 2007 on University Foundations’ General
Functioning Rules. Article L719-12 of the Education Code states that
public institutions with scientific, cultural, and professional
purposes can create within their entity one or several university
foundations which do not have legal personality by setting up an
endowment dedicated to the fulfilment of general interest and
not-for-profit making activities in compliance with the public
above-referenced article also mentions that university foundations
are subject to the rules governing public utility foundations. In
fact, university foundations function as sheltered foundations. They
cannot acquire legal personality. Instead, they pursue their purpose
through the founding public institution. University foundations can
receive legacies and donations. Authorization is not required from
the Ministry of the Interior or from the Conseil
d’Etat to create such
Scientific Cooperation Foundations (Fondations
de cooperation scientifique)
No. 2006-450 of April 18, 2006 on Research provides for the creation
of new public institution categories and, notably, the creation of
scientific cooperation foundations in order to set up research and
higher education centers.
L344-11 of the research code states that scientific cooperation
foundations are governed by the regulations governing public utility
"Hospital" Law of July 21, 2009 created a new type of
foundation which facilitates the establishment of links between
hospitals and industry to advance common research projects.
L6141-7-3 of the Public Health Code "PHC" states that
Hospital Foundations can be created by public health institutions to
further general interest and not-for-profit purposes that contribute
to the research missions mentioned in article L6112-1 of the PHC.
foundations are subject to the rules governing public utility
foundations. However, it is important to note that the implementing
texts have not yet been issued.
Endowment funds (fonds de
endowment fund was established by Law No. 2008-776 of August 4, 2008
on the Modernization of the Economy, but related executive decrees
are still pending.
endowment fund is a not-for-profit legal entity that receives and
manages the assets and rights of any kind that are contributed to it
freely and irrevocably.
endowment fund directly pursues a mission of general interest or
finances structures that have missions of general interest and can
have a fixed or indefinite term.
can be one or more private individuals or legal entities. There is no
minimum amount required and no prior administrative authorization
needed for the creation of an endowment fund.
endowment fund can be created as easily as an association. There are
no standard models of by-laws to be complied with and no imposed
governance. The endowment fund is managed by a board of directors
comprised of at least three members.
endowment fund can receive legacies and donations but cannot receive
public funds except as otherwise provided by specific authorization.
funds benefit from the attractive tax regime applicable to Public
Utility Foundations apart from the 2007 Law on Work, Employment and
Purchasing Power or "TEPA Law" provisions (See Section V
below for more information).
of October 2011, over 600 endowment funds have been set up in a wide
variety of sectors (environment, culture, social issues, etc.) over
an approximately two-year period.
Public Benefit Status
law recognizes two forms of public benefit status: (1) general
interest, in which the organization's donors are eligible for tax
benefits, and (2) public utility, which entitles the organization to
the benefits of general interest status as well as additional tax and
fiscal preferences. Organizations with public utility status are
subject to requirements, such as stricter controls over the use of
the organization’s funds and over the distribution of assets
General Interest Status
that provide support to organizations with general interest status
are able to receive a tax credit for their donations. Activities that
qualify as general interest include philanthropic, educational,
scientific, social, humanitarian, sporting, family, 
and cultural activities, as well as activities aimed at the promotion
of artistic heritage, the promotion of the defense of the
environment, and the promotion of French culture, language, and
scientific knowledge (Articles 200 and 238bis, Tax Code).
order to receive general interest status, an organization must engage
primarily in at least one of the above activities. The services
must be provided to a large, undefined group of individuals in
France, and be not-for-profit in nature. 
Public Utility Status
utility status is conferred upon associations and foundations
pursuant to a decision of the Conseil
In order to be recognized as a public utility organization, an
statutes that comply with the model statutes provided by the Conseil
contain requirements and restrictions regarding internal structure,
use of funds, and distribution of assets upon dissolution);
primarily in general interest activities; and
other requirements regarding the financial viability and size of the
Specific Questions Regarding Local Law
association is permitted by law to pursue any purpose "other
than the sharing of profits" (Article
1, Associations Law). By law, foundations may only engage in
public benefit activities. In addition, the Tax Code explicitly
forbids all insiders, including board members, managers, employees,
and other third parties, from having a financial interest in any
not-for-profit organization. Financial disinterestedness is
characterized under French law by the following (Article
261, 7.1 (d), Tax Code):
management and administration of the organization are carried out on
a voluntary basis by those having no direct or indirect interest in
its operations; 
are not distributed either directly or indirectly, but used only for
the statutory purposes of the organization; and
the event of dissolution, members of an organization or their
successors may not receive any part of the assets, except for the
right to recover their contributions.
are also prohibited from making excessive payments for goods or
services of any kind, including payment of excessive salaries to
managers and employees, and excessive benefits to members, managers,
or their families. 
a general rule, an organization is exempt from certain taxes only if
all individuals having ties to it, including board members,
management, employees and third parties, have no direct or indirect
interest in its operations or assets.  It is also generally
accepted that founders of corporate foundations, as well as founders
and donors of public utility foundations and public utility
associations, may not maintain any property interests or rights of
reversion for any contributed property, since this would violate
their fundamental requirement to serve the public benefit (Model
Charters for Public Utility Associations and Foundations, Conseil
are certain exceptions, however. Members of declared associations and
general interest associations may retain an ownership interest in
their donation and, if permitted by the organization’s
governing documents, over any contributions to the association’s
endowment capital and any membership dues paid (Article
15, Implementation Decree of the Associations Law). 
the dissolution of a declared or general interest association, the
contributions of members, including dues may be returned to these
members. All other assets may be transferred to a government agency
or an NPO authorized to receive contractual donations, which are
generally organizations that provide a public benefit in accordance
with the association’s governing documents or pursuant to a
decision of the general assembly (Article
15, Implementation Decree of the Associations Law). 
Similarly, a dissolved public utility association may transfer its
assets to government agencies, public utility organizations with
similar purposes, or associations whose purposes are exclusively
charitable or related to scientific or medical research (Model Charter for Public Utility Associations, Conseil
dissolution, a corporate foundation may only distribute its assets to
a government agency or public utility organization with similar
purposes (Article 19-12, Law on Philanthropy Development). A public
utility foundation may distribute its assets upon dissolution to
government agencies, public utility organizations with similar
purposes, or associations whose purposes are exclusively charitable
or related to scientific or medical research (New Model
Charter for Public Utility Foundations released on March 13, 2012,
must approve any plan for distribution of assets of a dissolved
public utility foundation.  The
has indicated that it is theoretically possible, though highly
unlikely, that assets could be distributed to a for-profit legal
entity, provided its primary objectives are similar to those of the
may engage in any activities except those contrary to law, morals, or
the integrity of the territory or the republic. All types of
foundations must carry out activities that benefit the general
and foundations may engage directly or indirectly in any commercial
activity, and generally there is no distinction between related and
unrelated economic activities.  In
order to remain an NPO and receive concomitant tax benefits, however,
an organization’s economic activities should not be its
"predominant" activity (Instruction of 1998).
associations and general interest associations may engage in
political activities.  A special
category of associations may provide direct financial support to a
political party or an election campaign. Such political
associations are established for a limited period of time and are
restricted to engaging in these stipulated activities only. 
Public utility associations and public utility foundations may not
in political activities (Opinion of the Conseil
of June 13, 1978, No. 322894).
L111-1 of the Education Code provides that the "acquisition of
general education and of a recognized qualification is granted to all
youth regardless of their social, cultural or geographic origin."
Control of Organization
in French law prevents a French NPO from being controlled by another
organization. A French association or foundation might be established
and controlled (but not owned) by a for-profit entity; this situation
would generate additional IRS scrutiny. A French association or
foundation, likewise, could be controlled but not owned by an
American grantor charity; this situation would have to be disclosed
in the affidavit.
following section discusses relevant tax legislation, recognizing
that taxes may affect the amount of the grant actually flowing to the
law generally exempts all associations, corporate foundations, and
public utility foundations from commercial taxes such as the
corporate income tax, turnover tax, and the professional tax; special
rules apply to VAT. Similarly, earnings from economic activities are
exempt from taxes, provided that they are not distributed as profits
and that other features are present to distinguish the organization
from a commercial enterprise (The Tax Instruction of 2006, which has
now become BOI-IS-CHAMP-10-50-20120912). 
Specifically, under Article 261,7.1° of the Tax Code, an NPO with
annual revenue exceeding €60,000 is eligible for tax-exempt
Management does not have a financial interest in the NPO (the
"disinterestedness" factor); and
The NPO does not compete with the commercial sector; or, if it does,
an inquiry concludes that the NPO does not conduct its activities in
the same manner as those in the commercial sector.  The
not-for-profit nature of the activity will depend on its compliance
with the "four "P" rule" defined in the 1998
the [P]roduct offered satisfies a need not met by the private
sector; 2) the [P]ublic is unable to afford the product offered by
the private sector; 3) the [P]ricing is lower than in the private
sector; and 4) the [P]romotion of a public interest mission may
not use advertising or marketing tools in the same manner as
NPO with annual revenue below €60,000 qualifies for tax-exempt
status only if (1) its principle activities are not-for-profit; and
(2) it does not distribute any income or assets to any private
interests (Article 206,1bis, Tax Code).
Tax Credits for Charitable Contributions
entities are eligible for tax credits for donations to general
interest associations, public utility associations, and public
utility foundations. Tax credits are calculated at 60% of the value
of the donation, and a legal entity’s total tax credits for one
year may not exceed 0.5% of their annual turnover. Excess amounts may
be reported to the tax authorities, and credited against tax due on a
carry-forward basis for the subsequent five years.
are eligible for tax credits for donations to public utility
organizations, associations of general interest, and religious
organizations authorized to receive contractual donations. Tax
credits are calculated at 66% of the value of the donation, and an
individual’s total tax credits for one year may not exceed 20%
of their taxable income. Employees of a commercial entity that make a
donation to a corporate foundation founded by their employer are
eligible for this tax credit. 
are also eligible for tax credits for donations to certain charitable
organizations that serve the needy. Such tax credits are calculated
at 75% of the value of the donation, not to exceed €521. 
Donations over this amount are eligible for a tax credit calculated
at 66% of the donation and not to exceed 20% of the individual’s
annual income. As is the case with legal entities, individuals may
report excess amounts to the tax authorities, which will be credited
against their taxes on a carry-forward basis for the following five
No. 2007-1223 of August 21, 2007 in favor of Work, Employment and
Purchasing Power ("TEPA Law") established a tax credit on
wealth tax for those taxpayers who make donations to public utility
foundations (cash or full ownership of listed companies’
shares). The tax credit is calculated at 75% of the donation,
with a limit of €50,000.
on Contractual Donations ("Registration Fees" –
law treats simple donations differently than contractual donations,
which include gifts made by will. 
Most NPOs may receive simple donations and contractual donations
given by public utility organizations. 
The law, however, restricts which organizations are entitled to
receive contractual donations given by entities other than public
utility organizations (Article 10, Associations Law; Model Charter
for Foundations, Conseil
federations of family associations;
engaged in medical or scientific research, or charitable assistance
for the needy (Article 6, Associations Law);
that finance electoral campaigns;
financing political parties; and 
order to receive contractual donations, these organizations must
receive prior administrative approval.
utility foundations, such as the Fondation
are able to receive contractual donations on behalf of associations
that do not otherwise qualify to receive contractual donations. To do
so, the public utility foundation maintains an account for the
are able to use these accounts to make donations, including
contractual donations, which the beneficiary would otherwise be
unable to receive.
donations are tax-exempt. Contractual donations, however, are subject
to registration fees  unless the
donations are granted to:
utility organizations whose revenue is exclusively allocated to
scientific, cultural or artistic, environmental or charitable
purposes, or animal protection;
whose revenue is exclusively allocated to scientific and medical
public utility organizations engaged in higher education and popular
for the purpose of building commemorative war monuments (Article
795, Tax Code).
funds (Article 795, Tax Code).
Value Added and Turnover Taxes
standard VAT rate is 19.6%. A reduced rate of 5.5% is applied to
certain goods and services, including medicine and pharmaceutical
products, equipment for handicapped individuals, the provision of
housing and food at elderly care facilities, and others relevant to
NPOs (Article 278-0 Bis Tax Code). 
The following activities are exempt from VAT
with a social or philanthropic character provided to any person, as
long as the price has been accredited by the state and does not
distort market prices. "Social and philanthropic activities"
are described by the tax authorities as including activities related
to childhood, social tourism, shelter, and socio-education;
and goods related to the activities of organizations whose main
goals are primary, secondary, superior, university, or professional
care for the elderly;
expenses for health care organizations;
that social, cultural, educational, sports, philosophical,
religious, political, patriotic, and civic organizations, as well as
professional unions, provide for their members; and
fund-raising events per year.
an NPO uses its assets to further for-profit and not-for-profit
activities, however, any VAT exemptions to which it is entitled are
calculated as a pro
ratio of the organization’s income from its VAT-exempt and
non-exempt activities (Article 212, Appendix 2, Tax Code).
goods imported by organizations with "charitable or
philanthropic organization" status granted by the French
Customs Authorities are exempt from customs duties and taxes (Article
Tax Code, Appendix IV). The goods that qualify include:
necessities such as food, medicine, clothing, and bed linens
distributed free of charge;
not to exceed €13,000 in value per year, received free of
charge and used for fundraising at occasional charity events that
benefit needy persons;
equipment and office materials, not to exceed €6,000 per year,
that will serve an organization’s operational needs, or
charitable or philanthropic objectives;
for distribution to or to be made available free of charge to
victims of disasters in the EU; and
imported by disaster-relief agencies to be donated to victims of
disasters during the period of the organization’s activity.
categories of goods exempt from customs include:
scientific, and cultural materials, as well as scientific
instruments imported by scientific, educational, or cultural
goods listed in appendix I of European Council Directive imported by
public utility organizations and others accredited by the customs
by organizations accredited by the customs administration that
provide education and assistance for the blind or handicapped
(Article 48, European Council Directive No. 2009/132).
imported under these exemptions, with the exception of those destined
for accredited organizations that provide education to the blind and
handicapped, which are lent out, rented, or transferred will be
subject to import duties.
Double Tax Treaties
United States and the French Republic have signed two double tax
Convention Between The United States Of America And The French
Republic For The Avoidance Of Double Taxation And The Prevention Of
Fiscal Evasion With Respect To Taxes On Estates, Inheritances, And
Gifts (November 24, 1978 modified on December 8, 2004); and
Convention Between The Government Of The United States Of America
And The Government of the French Republic For The Avoidance Of
Double Taxation And The Prevention Of Fiscal Evasion With Respect To
Taxes On Income and Capital (August 31, 1994 modified on December 8,
2004 and January 13, 2009).
10 of the Convention on Estates, Inheritances, and Gifts provides
entities transferring funds to a French organization an exemption
from the U.S. federal gift tax and estate tax if the recipient would
otherwise qualify as tax-exempt U.S. Organization.
Donations to Not-for-profit Organizations in the European Union and
European Economic Area
order to comply with community case law, France has extended the
patronage system to donations made in favor of organisations that
pursue the same objectives and present characteristics similar to
eligible French organizations, if their headquarters are located in a
Member State of the EU, in Iceland, or in Norway (law no. 2009-1674
of 30 December 2009).
has thus waived the criterion of establishment in France that
restricted the benefit of the patronage regime solely to donations
made in favor of an organization established in France.
French Tax Authorities released on January 30, 2012 a guidelines
project specifying the rules applicable to French organizations
regarding the territorial scope of their activities. The guidelines
project specifies that the organization receiving the donations,
established on French territory, must carry out an eligible activity
in France, except for (1) activities concerning the spread of the
French culture, language or scientific knowledge, and (2) the
organization and implementation of humanitarian programs. At
this stage, the guidelines project has been withdrawn, but the
conditions to benefit from the patronage regime remain uncertain.
benefit of the patronage regime for donations made to organizations
whose headquarters are located outside of France is subject to
obtaining an approval. A decree and order dated February 28, 2011,
published in the French Official Journal dated March 2, specifies the
conditions for this procedure and the filing requirements that are
the responsibility of the donors.
of the approval procedure
approval request, submitted in French on plain paper in compliance
with a template attached to the regulatory text, must also include
the supporting documents, the list of which is fixed by decree,
attesting that the organization pursues objectives and has
characteristics similar to organizations whose headquarters are
located in France and which meet the conditions set out in articles
200, 238 bis and
885-0 V bis of
the French Tax Code. Approval renewal requests are submitted under
the same conditions.
granted for an initial request concern the period included between
the date of its notification and December 31 of the third year
following this date.
requests must be submitted no later than June 30 of the last year
covered by the approval. In the event of renewal, the approval is
granted for a period of three years running from the following
January 1. In the event of refusal of approval, the approval in
progress produces its effects until its expiration.
list of approved organizations is published on the French Tax
Authority’s web site. This list is updated upon every approval
approval decision is notified to the organization and the grounds for
refusal must be provided.
approval may be withdrawn by substantiated decision if it is
established that the organization, in whole or in part, no longer
pursues objectives or no longer presents characteristics similar to
organizations whose headquarters are located in France.
Leader for Ernst & Young NFPO International Network
This Note does not address the legal issues regarding the
establishment of associations and foundations in the regions of
Alsace and Moselle, which are governed by a German-derived civil
code. However, all other legislation, including that concerning NPO
operations and taxation, is in force in these two regions.
Informal associations (i.e., those operating without the creation of
a legal entity) are not covered in this Note. Associations that exist
as a separate legal entity are technically called "declared
associations" under French law, but for purposes of this Note
they are simply referred to as "associations."
The Ministry of Interior cannot deny the notification, but it may
appeal to a court for dissolution or nullification of an association
if it believes its objectives or activities are illegal.
This requirement is not stipulated by statutory law but is practiced
by the Conseil
There is no minimum endowment amount required. In practice, however,
the amount of €1 million is often cited as a minimum amount
necessary to guarantee a stable and steady stream of income to a
public utility foundation through its investment.
the French Tax Authorities currently require that this amount be
brought up to €2 million.
The Instruction of 2004, which has now become
BOI-BIC-RICI-20-30-20120912 and BOI-IR-RICI-250-10-20121001.
Family activities refer to the creation and operation of family
associations to provide assistance to private schools.
Tax Adm. Doc. 5 B-3311 No. 11 of July 20, 1994 and Tax Adm. Doc. 4
C-712 No.11, which have now become BOI-BIC-RICI-20-30-20120912 and
Directors or board members are prohibited from receiving a salary.
However, they are allowed to receive remuneration up to three times
the ceiling established in Article L241-3 of the Social Security Code
per year per board member. The organization’s charter must
explicitly permit remuneration. An NPO may remunerate one board
member if its gross income exceeds an average of €200,000 over
the past three fiscal years, two board members if its income exceeds
an average of €500,000 over the past three fiscal years, and up
to three board members if its gross income exceeds an average of
The recovery of contributions to an association’s capital as
well as membership dues, however, is prohibited for public utility
Article 261, 7.1 d, Tax Code, and The Instruction of 2006, which has
now become BOI-IS-CHAMP-10-50-20120912.
Since assets distributed in conjunction with liquidation are
considered a contractual donation, the assets may only be passed on
to an organization allowed by law to receive contractual donations
(See Section V.B. above).
The Tax Instruction of 2006 has now become
BOI-IS-CHAMP-10-50-20120912  As a general rule, the Conseil
is reluctant to approve the termination of public utility foundations
and consents to termination only as a last resort.
The extent to which an NPO’s economic activities are related to
its primary purposes becomes relevant only in cases where there are
concerns that the NPO’s economic activities are unfairly
competing with the commercial sector.
An association may not engage in lobbying efforts for policies that
would directly or indirectly benefit a director of that association;
to do so would violate the financial disinterestedness requirement of
the organization’s management.
Political associations may receive contributions only from
These factors include: whether the activities, objectives, and
management methods are typical of commercial enterprises; whether the
requisite "financial disinterestedness" exists for the
organization’s board and management; and whether the NPO is in
competition with the commercial sector.
The Tax Instruction of 2006, which has now become
The 2003 law on donations to associations and foundations established
that corporate foundations may receive donations from employees of
the corporate founder and employees of the corporations that belong
to the same group as the corporate founder (Law No. 2003-709 of
August 1, 2003, Article 1). Prior to its enactment, French law
forbade donations and legacies to corporate foundations. To the
extent that donations from the previously defined employees are
allowed, the tax code extends to them the benefit of the tax credit
granted by § 200 of the French Tax Code. Separate rules govern
the tax treatment of contributions to the endowments of corporate
foundations and are beyond the scope of this Note.
This figure changes annually. For example, the threshold amount was
€513 for an individual’s 2010 annual income and €510
for 2009. This threshold has remained unchanged since 2011.
A simple donation may not contain contingencies on performance of
specified activities. A contractual donation is generally any
transfer of property to an NPO embodied in a written form. Generally,
contractual donations impose certain conditions or obligations on the
recipient, but this is not a necessary component. They also must
generally be notarized, although the possibility exists that any
written commitment to make a donation will be treated as a
As discussed above, corporate foundations may receive donations only
from employees of their founding corporation.
Neither associations financing electoral campaigns nor associations
financing political parties may receive contributions from any
sources besides individuals.
The rate of the registration fee is 35% for the first €24,430
transferred and 45% for amounts exceeding €24,430 for
contractual donations to public utility organizations. The rate is
60% for contractual donations to other associations (Article 777 of
the Tax Code).
Two other rates of 2.1% and 7% apply to a narrow range of goods and