What are sponsorships and how do they work in 2024?

 

Sponsorships are financial or material contributions made by companies to non-profit organizations or religious institutions under a contract. In addition to the direct benefit to communities, sponsorships can be tax-deductible, subject to legal requirements.

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What benefits do sponsorships bring?

1. Positive impact on the community: The aid given to NGOs supports education, health, culture or other vital areas

2. Tax-deductibility: Companies can recover part of the amounts invested by reducing the tax due.

3. 3Enhance brand image: Customers and partners value companies' social engagement, enhancing their reputation.

 

Tax deductibility limits in 2024:

• The deductible sponsorship amount is the minimum of:

  • 0.75% of turnover.

  • 20% of corporate income tax due.

 

Conditions for sponsorships in 2024

To qualify for tax benefits, sponsorships must meet the following strict conditions:

1. Sponsorship contract: The sponsorship must be documented in a clear contract between the company and the recipient organization. It must specify the amount sponsored, the purpose of use and the period covered.

2. Eligibility of the organization: The beneficiary of the sponsorship must be registered in the Register of Cult Entities/Units. This register can be checked online on the ANAF website.

3. Payment of the sponsorship: Sponsorships can be paid either by bank transfer or in cash, but it is essential to keep proof of payment.

4. Deadlines: Sponsorships for the fourth quarter of tax year 2024 must be made by December 31, 2024 to be tax deductible.

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Redirecting the sponsored amount after the end of the tax year

Even though the tax year has ended, there is an opportunity to redirect amounts of corporate income tax until June 25, 2025. This mechanism can be useful for companies that find after their final balance sheets that they could have sponsored more.

 

How does the redirection work?

1. Filing Form 177: This is mandatory for redirecting additional amounts to NGOs.

2. Existence of a sponsorship contract: Even for redirected amounts, a valid contract is required.

3. Payment by ANAF: The amount is transferred to the NGO directly by ANAF, thus eliminating the company's financial involvement.