26 rules of the country where it is based; moreover, its activities have to be carried out in France (at least partly). This poses a problem with regard to EU law, because donations to founda- tions based in another European Union Member State receive a less favourable tax treat- ment than donations to foundations carrying out activities in France. Under French tax law a usufructuary is subject to wealth tax on the total of his or her assets. A temporary transfer of a usufruct to an institution serving the common interest results in a reduction of the wealth tax payable, because the value of the property can be deducted from the assessment basis for the wealth tax during the period for which the usufruct is trans- ferred. Heirs and donees may endow a public utility association, a public utility foundation, the State or regional and local authorities with a part of the assets received by them. The value of the assets donated is not subject to estate tax. However, a gift tax deduction cannot be cumu- lated with an income tax deduction. As regards donations to foundations based abroad, an application for a tax exemption can be made at the Ministry of Finance provided that such exemption is laid down in a double taxation agreement25. The assets of the foundation are subject to a reduced corporate tax rate. Pursuant to the Finance Act 2005, income referred to in Art. 219 realised by public utility foundations is en- tirely exempt from corporate tax. To be eligible for tax exemption, the foundation must pursue a non-profit purpose. Income from rent and lease, agriculture and forestry or securities is subject to a tax rate of 10% instead of the standard rate of 33%, whereas income realised in the framework of a business activity is subject to the standard corporate tax rate. Public utility foundations benefit from the reduced corporate tax rate and a tax allowance in the amount of EUR 50,000. Income from a business activity poses some problems from a tax law perspective even if the business activity is carried out in pursuit of the foundation purpose, as it can result in a change in the legal status of the foundation. Foundations with income from a business activ- ity are in principle subject to trade tax, corporate income tax and value-added tax. They may claim a tax allowance in the amount of EUR 60,000 provided that the foundation is managed without consideration and that the non-business activity clearly outweighs the business activ- ity. Gifts and legacies for the benefit of a foundation, with the exception of gifts from hand to hand (don manuel), are subject to a register fee in the amount of 35% for the portion of the gift or legacy under and up to EUR 23,000; any exceeding amount is subject to a 45% regis- ter fee. 25 Cf. European Tax Handbook (2006), p. 251 et seq.