How does sponsorship work in kind or skills?

1. Patronage in Kind

Sponsorship in kind consists of a company making a gift of property or service to an organization of general interest: «donation of movable or immovable property or realization of a service without compensation» (§30 and following of BOI-BIC-RICI-20-30-10-20).

2. Skills sponsorship: a special form of in-kind sponsorship

Not legally defined, it is when a company makes available to employees for the benefit of a organization eligible for sponsorship for the carrying out of a mission within the beneficiary structure or provision of services for the same structure.

• Provision of staff: provision of services

The sponsoring company performs a task on behalf of the beneficiary organization. The provision of staff is only one means of achieving this. The company remains the employer of the employees concerned:

• There is no hierarchical transfer, employees remain under the management and control of the company
• The company pays all social security contributions to their salaries.

In practice, the free provision of services by the enterprise for the benefit of a general interest organization is analysed and functions as a gift in kind.

• Provision of staff: labour loan

The sponsoring company decides to make available some of its employees to a beneficiary structure, subject to their respective agreements, to carry out an assignment. This agreement is formalized in an amendment to the employment contract. Employees may perform duties close to their original duties or not at all.

Example: a chartered accountant who would paint an associative local

This operation is legally qualified as a labour loan and is governed by the French Labour Code (article L8142-3). In this case, the company remains the employer but some hierarchical authority is transferred to the host organization. The NEB is also responsible for a variety of responsibilities:

• Conditions for the performance of work with regard to working hours, night work, weekly rest and holidays.
• Obligations arising from the need for enhanced medical protection.
• The employees made available must enjoy the same collective benefits as temporary workers.

Who can donate in kind or skills?

Companies can normally make any kind of donation in kind. In this case, the tax reduction amounting to The same rates as for financial patronage. 

In the context of skills sponsorship, only companies under a real tax regime can use this system regardless of their category of profits. For enterprises in the categories of agricultural profits (BA) or non-commercial profits (BNC), it is possible to use this device on the additional condition that at least one employee be included in the structure.

On the other hand, all undertakings covered by the micro-enterprise or micro-exploitation regime are excluded in principle.

How to value a gift in kind or skills?

When donations are made in kind and/or skills, it is necessary to make use of them:

• for the calculation of the tax reduction declared by the company;
• for the non-accountable reintegration of the value of the donation by the company;
• for the preparation of the tax receipt by the recipient organization;
• for the determination of any counterparties delivered to the enterprise by the recipient organization.

The value of a gift in kind must be equal to cost of production excluding tax (second last paragraph of 1 of Article 238 bis of the CGI)

This is equivalent to the costs incurred by the enterprise in acquiring or producing the given property (Article 38 of Annex III to the CGI).

1. For goods:

• For goods acquired for consideration, the cost is the purchase price minus any discounts, commercial rebates and settlement discounts obtained plus transportation, handling and other costs directly incurred in the acquisition of goods and borrowing costs.
• For goods produced by the company, the cost of production is the cost of production, which includes costs directly incurred for production as well as indirect costs of variable or fixed production and borrowing costs.

In the case of a property in a capital account, the gift must be valued at its retained assignment value for the determination of the related capital gain or loss upon removal of the asset.

2. For the provision of services or in the case of a labour loan to employees:

The valuation must take into account the availability of employees which is also evaluated at cost. In this case, the sum pro rata temporis and the gross remuneration and social security contributions relating thereto are concerned up to three times the amount of the ceiling mentioned inArticle L. 241-3 of the Social Security Code (CSS), or €11,592 for 2024. 

Who should value?

The valuation is the responsibility of the person making the donation and not of the beneficiary organization (§30 of BOI-BIC-RICI-20-30-10-20).

Attention Point – Ethics

If the sponsor is responsible for valuing gifts in kind or skills (BOI-BIC-RICI-20-30-10-20, §30), the beneficiary has a duty of vigilance.  In particular, it is necessary to ensure that the valuation corresponds to market prices and, in particular, if revaluations are made during sponsorship, that this corresponds to a reality. 

How to set up a sponsorship in kind or skills: the stages?

The contractualization: the sponsorship agreement

Just like financial patronage, patronage in kind and/or skills is legally regulated by a sponsorship agreement.

In the specific context of the labour loan, the sponsorship agreement must be tripartite (enterprise, employee concerned and beneficiary organization). An amendment to the employee’s employment contract must also be provided. These two documents are separate and cannot be merged (last paragraph of Article L. 8241-1 of the French Labour Code).

It should be noted that the provision contract may also provide for a clause on transfer of hierarchical authority. This clause has two consequences:

• The employee is legally dependent on the hierarchy of the beneficiary organisation.
• In the case of labour loans, the host structure will be responsible for any mistakes made by the employees made available.