Non-profit organisations are exempt from most direct taxation. They are protected under Association loi de 1901: thus, not subject to VAT, business tax and territorial economic contribution (CET).
Promotion of collective social change, and maintaining strong volunteer support are both integral to the activity of non-profit organisations. As such, French taxation law permits certain levels of profit-making activity to remain untaxed.
The eligibility for this exemption is determined by three necessary conditions:
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Its management is not motivated by personal gain.
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The activity has no competition in the private sector.
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The profit-making activity requires a small part of the association’s budget, with non-profit making activity requiring the majority.
Additionally, non-profit organisations can organise 6 charitable events per year, of which the revenue is exempt from commercial taxes. Revenue gained outside of these events is taxed beyond €73,518 if it represents a small part of the budget. If it constitutes a majority of the association budget it is taxed from 1 Euro.
In certain cases, restructuring of the association may be beneficial. Creation of a subsidiary or division of the association into sectors may optimise the tax implications. Our expert accountants can support you with the associated legal, accounting, social, communication and financial challenges.
For more information on this topic, do not hesitate to contact us. Our team of experts will be more than happy to assist you with any queries you may have.
