Donation on
Defect Returns
Donation of faulty returns: a tax, ethical and legislative bonus.
Make the most of them by structuring your reverse logistics.
Every year in France, almost 630 million new non-food items are destroyed, i.e. around 4.3 million tonnes of products disposed of without recovery. (senat.fr), representing massive waste that the Anti-Gaspillage for a Circular Economy (AGEC) law aims to curb. Since January 2022, this legislation has formally prohibited the destruction of unsold non-food products, encouraging distributors and e-tailers to adopt sustainable alternatives such as reuse, recycling and, above all, donation.
This legal obligation, backed up by penalties, transforms a constraint into a genuine opportunity. Donating products, including slightly faulty returns, becomes a strategic lever on several levels. From an ecological point of view, it extends the life of items and significantly reduces the carbon footprint associated with production and waste management. For example, reusing even a slightly damaged household appliance saves several kilos of CO₂ in production and transport (ademe.fr).
As well as having an environmental impact, this approach also has an economic benefit, thanks to the tax exemptions available for sponsorship in kind. It is also a powerful tool for strengthening CSR (Corporate Social Responsibility) policies and improving brand image in the eyes of consumers who are increasingly aware of the issues.
In short, donating unsold goods is no longer just an act of philanthropy, but an intelligent solution that combines regulatory compliance, competitive advantage and social commitment. It requires companies to rethink their returns management to transform what used to be a cost into sustainable added value.
In this article, we look at how the donation of faulty returns is becoming a lever for optimisation, and we look at some practical ways of implementing it.
Context and issues: the end of compulsory destruction
From 1ᵉʳ January 2022 (with extension to all non-food unsold stock at the beginning of 2024), the AGEC Act prohibits the destruction of non-food unsold stock. From now on, retailers must direct these stocks towards recovery channels: donation, reuse or recycling, etc (Ministère de l’économie). These unsold items represent an estimated value of over €2 billion a year, of which barely half is donated.
Before the law, almost 15% was still being destroyed despite its potential for re-use, generating up to 20 times more greenhouse gas emissions than if it had been redistributed (. In pure terms, this represented up to 630 million euros destroyed per year (BFMTV and Agence de la transition écologique).
But legal ambitions are not enough to erase the dubious practices that remain. Reports such as this one by TF1 have revealed warehouses where unsold – sometimes new – products were destroyed en masse, including perfectly functional items such as razors and jewellery (TF1 INFO). Unfortunately, some e-commerce giants continue to opt for “profitable” destruction rather than management via donation or reconditioning.
This drift is not isolated. A number of accounts on the various discussion platforms even mention the burial or incineration of stock in sites such as the Atacama desert, highlighting the environmental pollution this causes.
Faced with these abuses, the AGEC Act acts as a regulatory corrective, but it also responds to growing societal pressure. NGOs, the media and consumers are constantly demanding more virtuous practices. Donation is no longer an optional ethical option: it is now a legal, moral and reputational imperative.
Tax leverage: turning constraints into advantages
Donating unsold and defective products is now a strategic tax lever for companies, far more than just a regulatory constraint.. The General Tax Code (Article 238 bis) authorises a tax reduction equivalent to 60% of the value of the donation, up to the limit of the more favourable of €20,000 or 0.5% of annual sales excluding tax (economie.gouv.fr). This scheme applies equally to donations of food products and unsold non-food items. To be eligible, donations must be made to associations, local authorities, public establishments, ESUS and SSE structures recognised as being in the public interest (MyTrocPro).
Emmaüs, la Croix-Rouge and La Ressourcerie are recognised examples of players in the Social and Solidarity Economy (SSE), often holding ESUS (Entreprise Solidaire d’Utilité Sociale) accreditation.
- Emmaüs is a major SSE movement, recognised for its action in favour of social inclusion, the fight against exclusion and reintegration through work. Its communities operate as welcoming and supportive structures, based on the strong values of mutual aid, recycling and making the most of donations. Emmaus also actively contributes to waste prevention and the development of environmental channels, making it a key player in the SSE and sustainable development (Emmaüs France).
- La Croix-Rouge française is also a well-known SSE organisation, with missions focused on humanitarian aid, social emergencies and social inclusion. It operates according to non-profit-making principles, promoting solidarity and social utility.
- La Ressourcerie(or network of ressourceries) is a set of structures dedicated to the recovery, sorting and resale of products and materials in a circular and social logic. This type of organisation works to reduce waste, promote the circular economy and create inclusive jobs, fully meeting the SSE and ESUS criteria.
What these organisations have in common is their social and environmental mission, their non-profit governance and their commitment to reinvesting their profits in their community projects. They are ideal partners for donations of unsold goods as part of in-kind sponsorship and CSR policies (Emmaüs France).
Mechanics of the tax reduction
In practice, the tax reduction is calculated on the pre-tax purchase value or production cost of the goods donated (LégiFiscal). Let’s take the example of a retailer with €100,000 of unsold goods: it can deduct €60,000 from its tax bill, while avoiding destruction costs and enhancing its CSR commitment.
Another example: a retailer with a turnover of €10 million who donates €30,000 worth of products will benefit from a tax reduction of €18,000, a net and immediate gain. Beyond €2 million in donations per year, the reduction rate drops to 40%, with the exception of certain food donations, which retain the 60% advantage (francegenerosites.org).
VAT and documentation: ensuring compliance
VAT treatment offers a second major advantage. If the VAT has been reclaimed at the time of purchase or production, the company does not have to pay it back to the tax authorities for donations made to eligible organisations, provided it has the appropriate tax certificate (Entreprendre Service Public). This exemption reduces the administrative and financial burden associated with donations. Careful documentation of transactions is nevertheless essential to preserve this advantage and avoid any reassessment in the event of an audit.
Summary: taxation as a driver for responsible action
Against a backdrop of pressurised margins and high logistics costs, the donation of unsold goods or faulty returns has become a powerful catalyst in the transition to a circular economy, thanks to in-kind sponsorship: tax relief, VAT optimisation, extra-financial valuation, etc.
Donating unsold or returned goods does more than simply avoid the ban on destruction imposed by the AGEC Act: it offers a cost-effective alternative to recycling, which is often costly in terms of transport, treatment and waste management. Any expenses incurred are offset by tax savings and reduced cash flow (less stock tied up, less warehouse space occupied). This mechanism provides an immediate improvement in profitability, while strengthening the company’s ecological footprint and social commitment.
Autant d’arguments qui transforment une Turn this obligation into a real strategic, financial and CSR opportunity, as long as you target eligible organisations such as Emmaus, Croix-Rouge or La Ressourcerie, and rigorously document each stage of the process (economie.gouv.fr).
CSR: an asset in terms of image and commitment
Donating unsold and returned goods is now an essential pillar of a company’s CSR strategy. Far more than simply complying with the AGEC law and regulatory constraints, it is now a tangible lever for differentiation that combines competitive advantage, environmental commitment and measurable benefits for society and the brand.
CSR impacts: transparency, data and communication
Turning unsold goods into donations is a practical way of reducing waste and carbon footprint. Companies can track key indicators such as the volume of unsold goods redistributed, the number of charities benefiting and the tonnes of CO₂ avoided. This data enhances brand communication with customers, investors and partners, providing tangible proof of a sincere and structured commitment. The publication of results in annual reports and digital communications (campaigns on social networks, CSR reporting, labels) lends credibility and visibility to the approach, while strengthening the confidence of stakeholders.
Competitive advantage and consumer expectations
At a time when competitiveness is no longer based solely on value for money, brand perception and ethics are becoming decisive factors. According to a Deloitte study, 85% of consumers take sustainability and ethical criteria into account when making a purchase.
What’s more, 72% of French people prefer companies that adopt anti-waste and sustainable approaches (ifop.com). Donations then become a powerful differentiation tool, particularly in fashion, electronics or everyday consumer goods, where media coverage of stock destruction can seriously damage the company’s image.
Communicating and promoting your commitment
Donations made to charitable organisations can be promoted and communicated, in particular through the publication of annual results, actions on social networks, or by obtaining responsible labels. This is objective evidence that reinforces the legitimacy of the brand and encourages stakeholders to support it.
Operational implementation
Transforming unsold and returned goods into donations requires rigorous operational organisation and appropriate tools, especially in the retail sector where volumes and stock dispersion multiply the complexity of the process. Donations cannot be improvised: they require the implementation of structured stages and the choice of technology partners capable of guaranteeing traceability, profitability and compliance.
The key stages in organising a donation
The first stage involves intelligent sorting and quality control to identify products that can be repaired, reused or immediately recycled through donation. This operation avoids over-consumption of logistics resources and unnecessary delays due to poorly controlled storage. The second phase involves storage and logistical preparation, which must take into account the fragility of the products and volume constraints, particularly when defective stocks are spread over a large number of sales outlets or intermediate warehouses.
The routing of donations to partner associations relies on complete traceability, with each product having to be registered and associated with a tax receipt issued by the beneficiary organisation – an essential condition for securing tax benefits and regulatory compliance. Efficient management of these flows often requires centralisation via SaaS platforms such as Reversys, which offers automated sorting, distribution management and detailed reporting to monitor each stage of the process.
Overcoming obstacles: costs and organisation
The main obstacles remain sorting and transport costs, and administrative constraints, with limited profitability for certain products that can only be recovered to a limited extent. A retailer without an optimised process can see its margins slashed significantly. To overcome these obstacles, the pooling of logistics, automation and the development of structured partnerships with associations are recommended solutions.
Why equip yourself with digital solutions?
The use of high-performance digital tools such as Reversys enables logistics flows to be organised and managed, donation management to be integrated into existing processes, and relations with partner associations to be made more fluid.
These innovations transform giving into a strategic investment, guaranteeing compliance with the law, maximising the social and ecological impact, and optimising the financial aspects of the process.
Conclusion
Donating defective returned products and unsold stock is now a matter of course for any committed company, and goes well beyond simple compliance with the AGEC law. This lever has a number of benefits: it meets a regulatory requirement, gives entitlement to a tax advantage, and is fully integrated into a CSR policy. Not only does this approach demonstrate a concrete environmental commitment to customers, it also reduces waste, limits the carbon footprint and reinforces the brand image in the long term.
Once perceived as a constraint or a cost centre, the management of unsold goods – when organised and equipped – is proving to be a source of value, cost optimisation, differentiation and real positive impact. This opportunity is structured around three main areas: fiscal leverage (tax reduction), ecological impact (reduction in waste and pollution) and the strategic dimension (responsible image and building customer loyalty).
However, to transform this legal obligation into a tangible and lasting asset, it is essential to rely on adaptive, high-performance tools capable of automating, centralising and tracking every stage of the donation process. In this respect, Reversys’ SaaS solution is a key partner, enabling companies to orchestrate their reverse supply chain effectively, establish lasting partnerships with associations, and guarantee optimum compliance while maximising operational efficiency.
In conclusion, giving is no longer a simple act of altruism or an imposed burden: for the modern retailer, it is becoming a creator of economic, ecological and strategic value.
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