LEGAL: Non-profit Law (France)

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Joshua Barsch
November 29, 2022

Non-profit Law (France)

This article describes the legal implications if a company outside France (especially in the US) seeks to set up a parallel hybrid non-profit organisation in France (as a service of Badaboost Ad Grants). French ’foundations’ are generally not suitable for the ’hybridization’ of commercial organisations and not for the rigid and formal association means. The focus of this article is therefore on the legal framework of French non-profit organisations (“NPOs”) (also known as non-governmental Organisations [“NGOs”]) and the translation of the legal provisions relating to foundations or consultancies. Determination of a company as equivalent to a foreign grantee under IRS Revenue Procedures 92-94.

I. Summary


French law recognizes two main legal forms of non-profit NGOs: associations and foundations. Associations can serve both private and charitable purposes. Non-profits fall

into one of two categories: (1) non-profits and (2) non-profits. Trade unions, religious organisations and political parties are also included as legal bases for non-profit organisations.


In general, French NPOs can receive benefits such as donations and grants in addition to

thier "contractual benefits". Individuals can receive a tax deduction of up to 20% of their

annual taxable income on donations. Contractual donations (donations that impose certain obligations on the recipient or contingent donations) are subject to special collections. Only

certain types of Organisations can receive contractual donations, and only certain eligible

organisations are exempt from paying taxes on donations.

II. Applicable Domestic Laws (France)

Law on Associations of July 1, 1901 ("Associations Law')

Decree of August 16, 1901 on Regulation of Public Administration for the Implementation of the Law of July 1, 1901 on Associations ("Implementation Decree of the Associations Law")

Law No. 87-571 of July 23, 1987 on the Development of Philanthropy ("Law on Philanthropy


Law No. 2003-709 of Auqust 1, 2003 on Philanthropu, Associations, and Foundations

Tax Code (France Republic)

Implementation Regulation (EEC) No. 2290/83 of July 29, 1983 of Regulation (EEC) 918/83

French tax administration guidelines BO1-IS-CHAMP 10-50-20120912

French tax administration guidelines BOI-BIC-RICI-20-30-20120912

French tax administration BOI-TVA-CHAMP-30-10-20120912

Model Charters for Public Utility Associations and Foundations, Conseil d'Etat

Order of the Ministry of Economics, Finance, and Industry of December 30, 1983 on Tax

Exemptions ("Customs Order")

Education Code (France Republic)

European Council Directive No. 132/2009

European Regulation No. 1186/2009

III. Relevant Legal Forms



Two or more people can form an association for legal activities other than "profit sharing" (Article 1 of the Association Law). In order to acquire corporate status, it is necessary to register the existence of the association with the prefecture (national land division). (3) The Association may seek Non-Commercial or Non-Commercial Status as described in the Section on Non-Commercial Status (Section III[B]).

In March 2012, the French Supreme Administrative Court (Conseil d'Etat) relaxed the standard law, giving flexibility to the association's management and working


There are currently around 1.3 million registered associations in France and many more unregistered associations.


Pursuant to the Development of Philanthropy Act of 23 July 1987 as amended by the Corporate Foundation Act of 4 July 1990:

“A foundation is a vehicle by which one or more persons commit to irrevocably endow

property, rights, or resources to achieve public good and charitable purposes.”

The concept of public or general interest refers to benefits that accrue, to the community as a whole, in matters such as, public health, the environment and philanthropy (see Section III(B) (1) for more information).

The foundation must have assets of its own or significant ongoing legacy or genetic funding sources. This attribute further distinguishes it from associations, which are simple groups of individuals or legal entities with a common purpose and limited funds. Private foundations are not allowed as all foundations must serve a charitable purpose.

     (2.1) Charitable foundations *(Fondations reconnues d'utilitu publique)*

A charitable foundation can be established by one or more natural or legal persons.

Foreigners can also establish charitable Organisations. The legal capacity to do so depends on the domestic law of the country of origin, not French law. In practice, the

amount of 1 million euros is often cited as the minimum amount a charity needs to guarantee a steady and stable income from its investments, but this is obviously to most people prohibitively expensive.

     (2.2) Partnership Foundation (Fondations artenariales)

The basis for the partnership is laid down in Law No. 2007 1199 of 10 August 2007 on the rights and obligations of universities. Article L.719-13 of the Education Code (French Republic) defines public institutions with scientific, cultural and professional purposes.


French law recognizes her three forms of public utility:

(1) General interest if donors to the organisation are eligible for tax incentives.

(2) Public Utility Status. This allows organisations to benefit from public interest status and additional taxes and tax credits, but is subject to additional requirements such as: B. Tighter control over the organisation's use of funds and distribution of assets upon dissolution;

(3) Social Institution (aka Social Enterprise) status granted to for-profit enterprises with charitable economic activities.


Donors who support non-profit organisation can receive tax credits for their donations. Activities considered of general interest include charitable, educational, and scientific activities, social, humanitarian, sports, family (1) and cultural activities. To obtain general profit status, an organisation must be primarily engaged in at least one of the above activities. The service must be offered to an undefined large group within France and is non-commercial. [2]


Non-profit status is granted to associations and foundations as determined by Conseil 'Etat.

To qualify as a non-profit organisation, an organisation must demonstrate or comply with:

  • Restrictions on internal structure, use of funds and distribution of assets upon dissolution);
  • Participate mainly in (public) general interests;
  • Meet other requirements related to financial viability and scale of the organisation
  • solidarity enterprise with social standing.

NB: The solidarity enterprise status of the social system. Commercial enterprises whose economic activities have a social purpose (such as political education or sustainable development) can apply for this status.

IV. Specific Matters Regarding Local Law


(1) An association is authorized through regulation to pursue any purpose "aside from the sharing of profits" By regulation, foundations may also most effective interact in public advantage activities.

The Tax Code (France Republic) explicitly forbids all insiders - which includes board individuals, managers, personnel, and different 1/3 parties - from having a specific economic interest in any NPO. Financial “disinterestedness” is defined below under French regulation through the following (Tax Code, Article 261, 7.1(d)):

  • The control and management of the enterprise are executed on voluntary foundation through the ones having no direct or oblique hobby in its operation;
  • Profits aren't disbursed both immediately or indirectly, however used most

effective for the statutory functions of the enterprise; and

  • In the occasion of dissolution, individuals of an enterprise or their successors won't acquire any a part of the property, besides for the proper to get better their contributions.

NPOs also are prohibited from making immoderate bills for items or offerings of any kind, which includes charge of immoderate salaries to managers and personnel, and immoderate blessings to individuals, managers, or their families.


As a well-known rule an enterprise is exempt from sure taxes most effective if all people having ties to it which includes board individuals, control, personnel and 1/3 parties - haven't any direct or oblique hobby in its operations or property.



Upon the dissolution of a declared or well-known association, the contributions of individuals (which includes dues) can be paid back to those individuals.


Upon dissolution, a company basis may also most effective distribute its property to a central authority organisation public software enterprise with comparable functions.



An association may engage in any activity except that which is contrary to law, morality, or the integrity of the territory or republic. All foundations must engage in activities that benefit the community. To this end, we highlight to our clients the tremendous contribution that many can make in terms of recommendations and advice in the form of a service to the "general public" in relation to their own level of expertise.


Associations and foundations may participate directly or indirectly in any commercial activity and generally make no distinction between related and unrelated economic activities. However, in order to remain an NPO while retaining tax benefits, the organisation’s economic activity must not be its "main" activity (1998 Decree Instruction).


Declared associations and non-profit organisations can be politically active. [3] Special categories of organisations may provide direct financial support to political parties or campaigns.


Nothing in French law prevents her NPO in France from being managed by another organisation. A French association or foundation may be established and controlled by (but not owned by) an American commercial enterprise. This situation would require an additional IRS review of her. Similarly, a French association or foundation may be managed by, but not owned by, an American charity. This situation must be disclosed in an affidavit.


The following section discusses relevant tax laws, recognizing that taxes may affect the amount of the grant actually received by the grantee.


French law generally exempts all associations, corporate foundations and charitable foundations from business taxes such as corporate income tax, sales tax, professional tax and VAT on certain goods and services. Similarly, income from the economic activities of NPOs is generally tax- exempt provided that it is not distributed as a profit and that there are no other factors that distinguish organisations from commercial enterprises (The Tax Instruction of 2006, which has now become BOI IS-CHAMP-10-50-20120912). [18) Specifically, under Article 261,7.1° of the Tax Code, NPOs with an annual income exceeding €61,634 benefit from tax exemption if:

A. The NPO's management has no financial interest in the NPO NPO (the "disinterestedness" factor); and

B. If the NPO does not or does compete with the commercial sector, or if an investigation reveals that the NPO does not operate in the same manner as the commercial sector.The charitable nature of the activity depends on compliance with the "Four Ps Rule" outlined in the 2006 Tax Ordinance.

(1) The product offered satisfies an unmet need by the private sector;

(2) The public cannot otherwise afford to purchase products provided by the private sector;

(3) The price is cheaper than the private sector; and

(4) Orders to promote the public interest may not use advertising or marketing means in the same manner as businesses.

NPOs with an annual revenue of less than €61,145 are eligible for tax-exempt status only if their main activity is non-profit. (2) Do not distribute income or assets for personal gain (Tax Code Article 206, 1 bis).


Certain goods imported by organisations granted the status of a non-profit organisation or charity by the French customs authorities are exempt from customs duties and other import taxes such as import excise tax (Tax Code, Article 50 octies, Annex IV) include (K):


The United States and the French Republic have signed two double tax treaties.

Article 10, Convention of Estates, Inheritance and Gifts provides exemptions from U.S. gift and inheritance taxes for corporations that transmit funds to French corporations.

Footnotes & References

(1.) Unofficial associations (ie, unincorporated Organisations) are not covered by this notice. Clubs that exist as separate legal entities are technically called 'declared clubs' in French law, but for the purposes of this memo they are simply called 'federations'.

(2) Directors or officers are prohibited from receiving salaries. However, each director may receive up to three times her remuneration, which is the upper limit set by Article L241-3, Social Security Code (French Republic). Organisation terms must explicitly allow Indemnification. An NPO may have one director if its average gross revenue over the last three financial years exceeds €200,000, two directors if its average gross revenue over the last three financial years exceeds €500,000, and up to: Three directors can be paid. Total revenue averages over €1,000.000.

(3) However, under certain conditions, clubs can now own and manage all acquired buildings free of charge.

(4) Fifteen years after the publication of the new tax rules, a parliamentary report was submitted to the Prime Minister aimed at relaxing certain rules. This he proposed raising the threshold of €60,000 or setting it as a percentage of the company's total funds.

‘Non-profit Law in France’, May 2019, International Center for Not-for-Profit Law (ICNL).