With just weeks to go before the end of the year, it is worth remembering there are several ways to donate or invest in order to reduce your tax bill for 2021.
Giving to a recognised charity is a way to reduce your tax while helping a good cause at the same time. There are also several tax-break investment schemes if you want a return on your money in addition.
With regard to charitable gifts, as long as the association or foundation you give to is ‘of general interest’, socially-useful, non-profit-making and located in France, then it will usually be eligible, although the organisation will be able to confirm this if you are in doubt.
You cannot go wrong by giving to one of the well-known French charities, and the tax advantage is increased if its main activity is ‘helping people in difficulty’, such as Les Restos du Coeur or the Fondation Abbé Pierre.
A standard 66% of donations to good causes is available as a reduction of your tax bill for the year, or 75% if the charity gives help such as food, healthcare or shelter etc.
The higher rate is available up to £1,000 of donated money (maximum reduction £75) after which the reduction amounts reduce to 66% again.
Total gifts giving rise to reductions may not be more than 20% of your net taxable income for the year. If this is exceeded, however, the excess can be carried forward and deducted from future tax bills for up to five years.
Many kinds of body in France are eligible for the reduction, for example Cancer Support France or French branches of the Royal British Legion. Similar good causes in EU countries may also qualify, but following Brexit this no longer applies to those in the UK.
As of this year, some charities offer the option of giving by simply sending a text.
If you prefer to invest, here are some options to consider:
1. Loi Pinel
If you buy a new flat and rent it out at a moderate rent, tax deductions of up to 21% of the property value are possible over several years. The benefits of the scheme are being reduced from 2023, but it remains in force under existing terms throughout next year.
2. Plan Epargne Retraite (PER)
This new kind of French private pension allows you to deduct money paid in from your taxable income, within a ceiling of 10% of the payments.
3. Investing in small businesses
A tax reduction called IR-PME is available at 25% of the investment. Invest directly, for at least five years, or via FIP or FCPI funds. The rate was only 18% last year but the higher 25% rate is to last until at least 2022.
4. Girardin Industriel
This allows a tax reduction of 110- 120% of the amount invested in a scheme to help small businesses in the overseas regions rent industrial equipment.
If you invest at least €5,000 in French cinema you can benefit from a tax reduction of up to 48% of the amount.