Full text: Taxation of foundations in Europe

5.1. General 
In international comparison, the number of foundations is relatively low in France. Moreover, 
these foundations only have a comparatively small amount of assets at their disposition. 
Among the roughly 1,200 existing foundations, approx. 500 are foundations for public utility 
(fondation reconnue d’utilité publique), 70 are business foundations (foundation d’entreprise) 
and 1,530 are foundations operating under the aegis of other foundations (fondation abritée 
par une fondation reconnue d’utilité publique); in contrast, there are approx. 800,000 asso-
ciations in France. The small number of foundations is explained, among other things, by the 
tax system which provides only few incentives for the establishment of a foundation. The 
institution of the foundation was not designed for the purpose of asset management22.  
Foundations are governed by the Act 87-571 of 23 July 1987 on the development of patron-
age (Loi du 23 juillet 1987 sur le développement du mécénat), which was recently changed 
by the Act 2003-709 from 1 August 2003 as well as by the related application decree 91-
1005 from 30 September 1991. 
5.2. Establishment 
If explicitly stated, the following provisions refer to public utility foundations. Foundations can 
be established by natural full age persons or by one or several legal persons, either by 
means of an endowment or a transfer of assets to the foundation. In most cases, an associa-
tion is set up in the first place, which is then replaced by a foundation. Also foreign natural 
and legal persons can set up a foundation in France, unless otherwise provided by their na-
tional law.  
According to French law, the founder has to pursue a particular purpose when endowing the 
foundation with assets. This purpose may be to directly realise income or to use the funds for 
a specific aim. Moreover, the founder is obliged to provide sufficient funds to effectively pur-
sue the purpose of the foundation.    
The public utility status and the assets of the foundation are subject to approval by the state 
regulatory authorities. The control of the foundation is in principle the responsibility of the 
Ministry of the Interior, which is assisted by other ministries concerned. 
22 Cf. Hellio et al (2007), p. 885.

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