Donations from individuals: what options, what tax modalities?

A donation, defined as an "act of impoverishment for the donor," means that no compensation is expected in return from the person making the donation. In France, this practice can take several forms, including manual donations, financial donations, or bequests, each subject to distinct tax regimes. These tax modalities, which are sometimes advantageous for the donor, help regulate and encourage donations while supporting actions in various fields.

Our RSM expert reviews the different forms of donations in France and guides you on the tax-specific details.

Annual donations to associations and foundations

Issue: Taxation on income and/or real estate wealth (IRPP/IFI)

What types of donations?

To support associations or foundations, there are several possible forms of donations:

• Payment of a sum of money;
• Transfer of an asset in kind with a market value (e.g., a work of art);
• Payment of membership fees, abandonment of income or products (e.g., abandonment of author rights);
• Expenses incurred in the context of voluntary work.
  In this context: the volunteer—who participates in the animation or operation of a public-interest association—without profit motive, may be entitled to a donation payment provided they keep receipts and demonstrate the waiver of reimbursement of these expenses through a tax receipt issued by the association.

The public-interest or charitable organization authorized to receive donations entitling the donor to a tax reduction must provide a tax receipt to the taxpayer. The taxpayer must then submit this document to the tax administration.

Donation: Income tax reduction

As an individual, it is possible to reduce the amount of your income tax through a donation. However, the tax reduction depends on the recipient of the donation:

• Organization supporting people in difficulty: For these donations, the income tax reduction reaches 75% of the amounts donated, up to an annual ceiling of €1,000 in 2024;
• Public interest or charitable organizations: For these donations, the income tax reduction is 66% of the amounts donated;
• Political campaign funding: For these donations, the income tax reduction is also 66% of the amounts donated, within a limit of €4,600 per election. Except for senatorial elections and municipal elections in constituencies of fewer than 9,000 inhabitants;
• Political parties: The income tax reduction is 66% within an annual ceiling of €7,500.

These donations are capped at 20% of the taxable income for the year concerned.

However, donations exceeding this ceiling are not lost: they can be carried forward for the next 5 years and will allow for tax reductions under the same conditions.

Our RSM advice: It is important to remember to declare all donations made in 2024. If the tax reduction is not applied in 2024, it can be applied in the years 2025 to 2029.Ces dons sont plafonnés à 20% du revenu imposable de l'année concernée.

Donation: Reducing real estate wealth tax

Donations to recognized public foundations entitle the donor to a reduction in IFI (Real Estate Wealth Tax) equal to 75% of the amounts donated, within an annual ceiling of €66,666, i.e., a maximum reduction of €50,000.

Note: The payments considered are those made between the deadline for submitting the IFI 2024 declaration and the IFI 2025 declaration.

Donations in anticipation of inheritance

Issue: Inheritance tax, donations made in anticipation of a person’s succession

Family donations of money

Donations of money to a family member are exempt from inheritance tax (taxes related to the donation) up to €31,865 every 15 years. This ceiling applies to donations made by the same donor to the same recipient.

The tax exemption is subject to two conditions:

• The donor must be under 80 years of age on the day of the donation;
• The recipient must be at least 18 years old or have been subject to an anticipatory measure on the day of the donation. If the conditions are met, an adult child can receive €191,190 every 15 years without tax liability:

1. €63,730 from their parents
2. €127,460 from their grandparents

Manual donations

Manual donations cover several forms:

• Donation of money;
• Donation of shares;
• Donation of company shares;
• Donation of movable property;
• Donation of works of art.

The donor can give up to €100,000 every 15 years with tax exemptions depending on the degree of kinship. This form of donation is cumulative with the donation of money.

As a general rule, donation taxes (taxes on transfers without compensation) are the responsibility of the recipient, but the donor can pay them without additional taxation.

Note: This donation will also have an impact when the donor's estate is settled. Indeed, it will be taken into account to determine the share assigned to each heir (report and reduction at the donor’s succession).

Donation of real estate

The donation of real estate must be formalized by an authentic deed, signed obligatorily by a public officer, particularly a notary. The calculation and payment of the taxes will be handled during the establishment of the various formalities related to the donation.

If the property is owned by a company—SCI for unfurnished rentals or a family SARL for furnished rentals—it is possible to donate the company shares owning the property. In this case, it is a manual donation and does not require a notary to create an authentic deed.

Present of usage

It is possible to give money on certain occasions—birthday, Christmas, birth, marriage, exam success, etc.—which qualifies as a gift.
Unlike a manual donation, a present of usage is not subject to tax. It is also not reportable when an inheritance opens.

The Court of Cassation explains that this refers to “gifts made on certain occasions, in accordance with custom, and not exceeding a certain value.” The case law is generally stable on the principles of qualifying presents of usage (Cass.1re civ. 6 déc. 1988, n°87-15.083 ; Cass. Civ., 11 mai 2023, n° 21-18.616). The amount must be consistent with the donor’s wealth and should not exceed a certain value.

For tax purposes, the legislator did not adopt a proportional rule for presents of usage relative to the donor’s wealth or income (CAA Douai, 17 août 2023, n°22DA00115).

The amount should be assessed on a case-by-case basis. If the courts requalify this gift as a donation, the judges will examine the relationship between the present of usage and the donor’s wealth. In any case, the present of usage is exempt from all operations aimed at determining excessive generosity, which consists of reconstructing the deceased’s wealth during the opening of the succession.

Generational donation

There is also transgenerational transmission: it is possible to donate differently to grandchildren. With the agreement of the children, the grandchildren can receive donations from their grandparents, benefiting from the first-degree kinship link.

The intermediate generation must agree to the donation made in favor of their own descendants. It is possible to transmit to both children and grandchildren.

If no agreement is reached, parents could initiate a legal action to reduce the donation made by grandparents in favor of the grandchildren. The transgenerational sharing donation is a tool that allows for "custom-made" donations, taking into account each person's needs, particularly those of the intermediate generation.

The tax applied during this donation is the one that would apply to donations between parents and children. The grandchildren thus take the rank of children, the €100,000 exemption is divided between the grandchildren, and the applicable donation tax scale is that of children.

Donations therefore take several forms, and various tax regimes apply. Depending on your family configuration, your wealth, your wishes, and your "life moment," several solutions are possible.