Taxation of foregone revenue donated to a nonprofit organization?

A ruling by the Paris Administrative Court (TA Paris, 2nd Section – 2nd Chamber, Nov. 27, 2023, No. 2125529) indirectly raises an interesting question regarding the taxation of a lawyer’s waiver of fees in favor of an association.

In this case, the attorney had provided services to an association, issued an invoice for those services, but then “donated” those services in kind by waiving the income, as permitted under Article 200 of the General Tax Code.

As a result, he received the tax credit and, at the same time, did not report the amount of foregone revenue for tax purposes.administration in accordance with their BOFiP) then adjusted his tax liability upward, ruling that this foregone revenue was taxable.

However, at no point were the amounts on the invoices actually received. One might wonder whether a company using the cash basis of accounting can indeed recognize revenue that has never actually been received.

It is also worth noting that, with regard to the patronage scheme, the legislature has provided in Section 238 bis for a prohibition on deducting donations but has made no provision regarding the possible reinstatement of foregone revenue.