Corporate tax changes could cause philanthropy crash, warns France générosités

France générosités is warning of a potential crash in corporate philanthropy if the French government goes ahead with its proposals for an overhaul of corporate tax rules, which currently incentivise giving with a tax deduction on some donations.

Currently, companies benefit from a 60% corporate tax deduction on donations up to 0.5% of their annual turnover. However, the government is proposing to reduce this to 40%, as it seeks to make savings to finance its poverty plan.

Corporate donations currently contribute 3 billion euros a year to the country’s non-profits, which France générosités is warning could be negatively impacted by a change in the tax rules. Associations and foundations have already been heavily impacted by other changes in recent years, including the reduction of subsidised jobs and abolition of the parliamentary reserve, as well as the continued decrease in subsidies.

2018 saw an increase in the generalised social contribution tax paid by retirees, and the transformation of the ISF tax on wealth into the IFI property tax. The withholding tax, which now sees tax deducted from income by the payer rather than the payee, also came into effect on 1 January 2019. At the same time, donations to associations and foundations of general interest have seen a decline of 4.2% over the past ten years.

A change in corporate tax rules could, France générosités has said, lead to increased costs for the state budget in areas currently supported by corporate patrons and affect the corporate sponsorship that currently supports local authorities and public bodies.

The proposal will be voted on at the end of December. In the interim, France générosités is continuing to warn of the risks of going ahead with the proposal and to highlight the value of corporate philanthropy to society.