Your NPO status

Altexis / NPOs

NPOs

About you

You are a not-for-profit organisation and want to know the tax rules that apply to you.

You are a not-for-profit organisation and are developing a profit-making activity as a secondary activity.

You are a not-for-profit organisation in full transformation and need advice for the transition.

Taxation in France

Entities designated as “not-for-profit organisations” (NPOs) are generally those not liable to business taxes due to their type of organisation and their purpose.
The most common NPOs are:

Associations;

  • Foundations officially recognised as beneficial to the public;
  • Corporate foundations;
  • Trade unions;
  • Endowment funds

Generally, these organisations are not subject to business taxes. However, not-for-profit organisations often develop a profit-making activity in parallel with their main associational activity. The organisation therefore needs to know about the tax impact of such an activity.

In what situations is a not-for-profit organisation subject to business taxes?

A not-for-profit organisation is considered non-profitable if it meets the following three criteria:

  • The management is disinterested: the NPO must not be administered by persons having a direct or indirect interest in the operating result;
  • If the NPO’s activity competes with that of other companies, the terms of exercising this activity must be different from that of companies;
  • The NPO must not exercise an activity that provides a service to companies who would gain a competitive advantage from this service

If the NPO no longer meets the not-for-profit criteria, it will be subject to business taxes.

What taxes would apply to taxpaying not-for-profit organisations (NPO)?

Tax-paying NPOs are subject to the following business taxes:

  • Corporation tax which is levied on the profit realised by the NPO during a year;
  • The Territorial Economic Contribution (CET) which is composed of the Company Real Estate Contribution (CFE) and the Company Value-Added Contribution (CVAE);
  • VAT for delivery operations of assets or services

If a non-for-profit organisation (NPO) develops a profit-making activity, can it benefit from business tax exemption?

Yes, an NPO may develop a profit-making activity as a secondary activity and continue to benefit from business tax exemption.

To benefit from this exemption, the NPO must meet the following conditions:

  • Its management must be disinterested;
  • Its not-for-profit activities must be substantially predominant;
  • The amount of its annual revenue from the profit-making activities must not exceed €63,059.

If the amount of revenue exceeds €63,059 but the not-for-profit activity is still predominant, you could consider “sectorisation” to isolate the profit-making activity from the non-profit-making activity.

If the profit-making activity becomes predominant, you could consider creating an independent structure to isolate the profit-making activity once and for all.

It is quite possible to envisage a development in various stages. Your tax lawyer will be able to answer any tax questions you may have.

Our support

Altexis offers you full support in your capacity as a not-for-profit organisation, in particular:

  • We can check if one or all of your activities are liable to business taxes;
  • We can offer you support during the transition to profitability: isolation of the profit-making activity or switching completely towards profit-making activities.
  • We can help you file your tax return relating to these changes