Among the systems that companies use to lighten the huge tax burden that they are forced to bear each year, there is certainly that of sports sponsorships. It is typical to find logos and advertisements of all kinds on sportsmen and teams: jewelers, restaurateurs, construction companies, shops and other public establishments.

Many companies therefore decide to set up more or less expensive advertising campaigns to obtain economic revenues and create costs to lower their profits and therefore pay less taxes.

The costs for sponsorships appear to be fully deductible and equivalent, from our system, to advertising if the sponsorship respects some fundamental rules.

Advertising costs: they are entirely deductible in the year in which they were incurred, or in equal amounts in the same year and in the following four years.

Entertainment expenses: the deductibility of which occurs during the sustained period, if they meet the requirements of inherence and congruity established by the D.M. 19 November 2008 and, therefore, to a flat rate based on the volume of the company’s revenues, or:

  • 1.3% for revenues up to 10,000,000 euros;
  • 0.5% for revenues from 10,000,000 up to 50,000,000 euros;
  • 0, 1% for revenues over 50,000,000 euros.

Again for the sponsor, for VAT purposes, if the amount of the sponsorship falls within the advertising costs the tax becomes deductible, while it would be non-deductible, and therefore a real cost, if the sponsorship were included among the entertainment expenses. To enjoy all the tax benefits of sports sponsorship it is necessary to respect some key principles in order not to allow any tax commission to question the validity of such operations, thus avoiding that the relative costs can be counted among the expenses of representation.

Configure sponsorship as an advertising costs:

  • Tangible presence of a service: the sponsor, ie the company that pays the fee to the sponsored, must receive something in exchange for the purpose of seeing a commercial return from this operation.
  • The sponsored sports club therefore, must in some way advertise the sponsor’s products or services by offering the latter a sales channel that can potentially bring to sponsor relevant results.
  • In the sponsorship contract the obligations of the sponsored sports club must be clearly understood in relation to the consideration paid by the sponsor and these commitments must be respected.
  • Expenses for sponsorships incurred by a company during the year must be balanced with respect to its business volume.