Saturday, 22 January, 2022

Donations to associations: the Court of Auditors points out the insufficiency of controls


The financial magistrates looked at the work of the Bercy services with regard to associations, at the center of numerous tax advantages. They warn about the insufficiency of controls and the risk that organizations that do not respect republican principles will benefit from these devices.

061445031806_web_tete.jpg

The summary of the Court of Auditors published Wednesday should not go unnoticed at a time when the bill against separatism and its article on religious associations are unleashing passions. The financial magistrates looked at the taxation of donations to associations – not just confessional – and drew several worrying lessons. They believe that the control of tax-exempt donations made to associations is insufficient. They also consider that there is a risk of seeing “Tax advantages granted to associations and their patrons benefit organizations that do not respect republican principles”.

The taxation of donations is an important issue. The Court of Auditors recalls this in a few figures. The budgetary cost granted by the State in favor of the 1.5 million active associations amounts to 7.2 billion euros in subsidies, to which are added 21 tax advantages for a little over 3.7 billion euros. euros (in 2018).

Donors

On the organization of checks by Bercy, the Court is particularly harsh. “ While the issuance of tax receipts without prior approval is a singularity French, as the Court recalled in its 2018 report on public support for corporate sponsorship, the checks carried out by the tax administration remain few and far between ”, writes its first president, Pierre Moscovici.

The Court deplores the weakness of controls both with regard to associations and to donors, whether companies or individuals. Regarding the latter, she considers that it would be useful to oblige them to indicate in their annual income tax return the names of the organizations receiving their donations, as was the practice before 2014.

Read also:

Pierre Moscovici: “At the time of fake news, the Court of Auditors must be more responsive and accessible”

The rulings, these answers provided by the administration to questions asked by taxpayers, also caught the attention of financial magistrates. They do not provide real legal certainty, according to the Court. The problem is all the more acute as the number of rescripts linked to sponsorship increases: there were more than 5,400 in 2019, against 4,672 processed by the administration in 2017. “Each year they represent around a third of all rulings issued by the tax services”, notes the summary, while stressing that they report “A cumbersome procedure with a battery of criteria some of which remain unknown to the public”.

Ideological content

The Court recommends improving information on the benefit of sponsorship by ensuring wide distribution of sectoral thematic sheets from the Official Bulletin of Public Finances (BOFiP) on tax matters relating to associations.

Finally, the magistrates noted that the tax administration was based on an internal note “Very imperfect” to manage association cases “With ideological content”. “This note rests on fragile legal bases, leaving a large part to the appreciation, sometimes subjective, of the administration and the Court could note that its application is heterogeneous on the territory. In addition, a note of this nature, which establishes the doctrine of the administration and specifies the modalities of application of the tax rule, should be published in the Official Bulletin. “

The Court considers that the bill on separatism “Could provide a more secure legal basis for the examination by the tax administration of the situation of associations with ideological content”.

The sponsorship tax regime

Associations can benefit from exemption from commercial taxes (corporate tax, value-added tax and territorial economic contribution) or from the advantages of sponsorship, recalls the summary of the Court of Auditors. “Benefiting both individuals and companies, the sponsorship tax system allows reductions in income tax, corporate tax and tax on real estate wealth”. Another possible benefit: exemption from free transfer rights. Its cost? 1.5 billion euros for income tax (granted to 5.5 million households in 2018) and 0.8 billion for corporate tax and income tax for 77,000 companies .

The financial magistrates looked at the work of the Bercy services with regard to associations, at the center of numerous tax advantages. They warn about the insufficiency of controls and the risk that organizations that do not respect republican principles will benefit from these devices.

061445031806_web_tete.jpg

The summary of the Court of Auditors published Wednesday should not go unnoticed at a time when the bill against separatism and its article on religious associations are unleashing passions. The financial magistrates looked at the taxation of donations to associations – not just confessional – and drew several worrying lessons. They believe that the control of tax-exempt donations made to associations is insufficient. They also consider that there is a risk of seeing “Tax advantages granted to associations and their patrons benefit organizations that do not respect republican principles”.

The taxation of donations is an important issue. The Court of Auditors recalls this in a few figures. The budgetary cost granted by the State in favor of the 1.5 million active associations amounts to 7.2 billion euros in subsidies, to which are added 21 tax advantages for a little over 3.7 billion euros. euros (in 2018).

Donors

On the organization of checks by Bercy, the Court is particularly harsh. “ While the issuance of tax receipts without prior approval is a singularity French, as the Court recalled in its 2018 report on public support for corporate sponsorship, the checks carried out by the tax administration remain few and far between ”, writes its first president, Pierre Moscovici.

The Court deplores the weakness of controls both with regard to associations and to donors, whether companies or individuals. Regarding the latter, she considers that it would be useful to oblige them to indicate in their annual income tax return the names of the organizations receiving their donations, as was the practice before 2014.

Read also:

Pierre Moscovici: “At the time of fake news, the Court of Auditors must be more responsive and accessible”

The rulings, these answers provided by the administration to questions asked by taxpayers, also caught the attention of financial magistrates. They do not provide real legal certainty, according to the Court. The problem is all the more acute as the number of rescripts linked to sponsorship increases: there were more than 5,400 in 2019, against 4,672 processed by the administration in 2017. “Each year they represent around a third of all rulings issued by the tax services”, notes the summary, while stressing that they report “A cumbersome procedure with a battery of criteria some of which remain unknown to the public”.

Ideological content

The Court recommends improving information on the benefit of sponsorship by ensuring wide distribution of sectoral thematic sheets from the Official Bulletin of Public Finances (BOFiP) on tax matters relating to associations.

Finally, the magistrates noted that the tax administration was based on an internal note “Very imperfect” to manage association cases “With ideological content”. “This note rests on fragile legal bases, leaving a large part to the appreciation, sometimes subjective, of the administration and the Court could note that its application is heterogeneous on the territory. In addition, a note of this nature, which establishes the doctrine of the administration and specifies the modalities of application of the tax rule, should be published in the Official Bulletin. “

The Court considers that the bill on separatism “Could provide a more secure legal basis for the examination by the tax administration of the situation of associations with ideological content”.

The sponsorship tax regime

Associations can benefit from exemption from commercial taxes (corporate tax, value-added tax and territorial economic contribution) or from the advantages of sponsorship, recalls the summary of the Court of Auditors. “Benefiting both individuals and companies, the sponsorship tax system allows reductions in income tax, corporate tax and tax on real estate wealth”. Another possible benefit: exemption from free transfer rights. Its cost? 1.5 billion euros for income tax (granted to 5.5 million households in 2018) and 0.8 billion for corporate tax and income tax for 77,000 companies .