France warned on cross-border donations

France warned on cross-border donations

News

The European Commission has warned the French government that it could be taken to the European Court of Justice (ECJ) unless it stops taxing donations to foreign non-profit bodies in other EU countries.

Donors in France pay no tax on donations to domestic non-profit bodies but the French government taxes donations to foreign non-profit organisations at 60%. The commission has said that France has two months to change its laws to give the same tax relief on donations to non-profits across the EU as it does to domestic organisations, or it might refer the matter to the ECJ.

Clive Cutbill, head of philanthropy at international law firm Withers, said, “I have heard rumours that the French will change their law. Whether this is a direct consequence of the directive is hard to say because nothing has so far happened to the countries, including the UK, that did not respond to a similar notice in 2006.”

In 2006, the UK and other countries including Ireland and Germany were issued with a similar ‘infringement procedure notice’ and told to give equal treatment to all EU-based non-profits. The UK has not responded.

Cutbill said the Netherlands have already devised a system that allows it to check if foreign non-profit organisations meet its criteria for tax relief. “Because the Dutch have shown it can be done, I think that the UK will eventually have to fall into line with the directive,” he continued.