“You can’t put a limit to anything.
The more you dream, the further you get “
Michael Phelps
Sports is, without a doubt, one of the most powerful vehicles of cultural, educational, moral, political, social and economic connection. And we leave the enumeration because its impact would need another separate entry from the present. Given our business nature, we find a very common and positive link between companies and the values of sport. As? Through certain sponsorship activities, donations, patronage or collaborations . These, which are not the same, do not carry with them the same tax consideration. Therefore, it is necessary to expose to what extent they have an impact on the Corporation Tax.
context
First, it is necessary to expose the differences between concepts. Donations, patronage or sponsorship differ from each other in the tax treatment. Thus, we define:
- donation: A completely disinterested activity will be understood as a donation by the issuer of the good or monetary contribution to the receiving entity or athlete. In this stadium, there is no direct interest in the profitability of such broadcast. This does not mean that the beneficiary can spread the impact that such action has generated. However, none of it is obliged.
- patronage: certainly similar to the previous If the case is that it is considered as an activity of general interest, a Spanish federation, an autonomic linked to another national, public universities or major schools assigned to them, as well as some regional entities, such as the Cervantes Institute or the Cervantes Institute or the Cervantes Institute or the Institut Ramon Llull. In this sense, direct economic return is not expected with respect to exercising, but intangible, linking its brand to the supported activity. It appears in the patronage law.
- sponsorship: would respond to actions similar to the previous ones, however, interest is totally commercial, since it is another type of advertising. Regulates through a contract that the beneficiary of the economic or material contribution undertakes to disseminate with certain terms and modalities. Being an action that expects economic return, it is included in the General Advertising Law.
All that issuance without any type of contract, obligations, deadlines and therefore commercial reflection, that is, actions of the selfless type, considered as donations, cannot benefit from any type of fiscal deductions, because they have no form Operation of any kind.
We have named the entrance as sports , but the truth is that Law 49/2002, relative to patronage, contemplates multitude of potentially beneficiaries of tax treatment and fiscal deductions profitable for your contributions, such as the following:
- Defense of human rights, of the victims of terrorism and violent acts, as well as defense of democratic principles.
- Social assistance and social inclusion, including those related to the attention to people at risk of exclusion for physical, economic or cultural reasons.
- Dissemination of civic, educational or cultural aspects, related to tolerance and respect.
- Promotion of scientific, health, environment, scientific research, technological development or development of the Information Society or Social Economy.
- Dissemination of aspects related to institutional strengthening, development cooperation, volunteer promotion, among others.
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- fiscal treatment of patronage
Thus, in fiscal matters, specifically as regards the Corporation Tax , it is when we begin to introduce characteristics, and above all, when the agreement takes place. It is there when certain commitments and incentives begin to emerge to try to generate an extra interest that already arouses the link between donor -or sponsor -and beneficiary -or sponsored -.
In this regard, it happens that from 1994 to the last law of 2002, the fiscal treatment for patronage has been contemplating an intermediate point from that selfless donation and the most differentiated end, sponsorship, which is the commercialization of such such action between both parties.
has been doing it because the figure of the patronage has been charging presence in the legislative framework, precisely because it is a collaboration that is contracted contractually. Therefore, recognition must also be generated in this regard. The most common fiscal figure for this is the business collaboration agreement, included in Chapter III of the 49/2002 itself. More concretely, in its article 25, ‘Business Collaboration Agreements in activities of general interest’.
Thus, we find as a fiscal incentive the discount on the Corporation Tax -which is usually 25% -, of the amount for patronage. It should be noted that this amount should not exceed 10% the tax base. In the following practical example , we can see how this fiscal incentive acts:
- tax base: € 300,000
- Amount to pay with the most common tax base: 300,000 x 0.25 = € 75,000
- On the other hand, 10% of € 300,000 is € 30,000, which is the valid limit for this case.
- Destined donation: € 20,000, which is less than the allowed limit (€ 30,000) as a deduction application.
- New tax base: 300,000 – € 20,000 = € 280,000
- Amount to pay with new taxable base: € 280,000 x 0.25 = € 70,000
- Difference to pay between first tax base and the second: 75,000 – 70,000 = € 5,000
Therefore, the company would have obtained a fiscal discount of € 5,000 tangible , for the patronage action. In addition, this action reports intangible benefits, such as the increase in its media presence, the assimilation of positive values of the athlete by the company or the increase of its confidence in its different stakeholders .
Fiscal Treatment of Sports Sponsorship
The sports sponsorship , as we pointed out above, is a purely advertising and commercial action. Hence, it must be directed to Law 34/1988, of November 1, General of Advertising. It establishes the contractual terms of such action to be developed.
Likewise, we must go to Law 10/1990, of October 15, of Sports. This law includes tax incentives for the sponsorization of sports activities . The amount provided as advertising sponsorship is considered deductible, as if it were any other advertising expense.
Now, this issue is quite particular, since there is no section in the Law of the IS on “sports sponsorship.” Therefore, this investment must be accredited as a commercial action. To do this, the expense must appear correctly accounted for and appear in the exploitation account. In addition, it must be attributed to the accrual. That is, we cannot deduce in 2016 an advertising expense of two years ago. There must be a correlation between income and expenses. As in any deduction, the expense must be justified documentary. Any economic item that appears in the exploitation account must have a physical support. Without it, it cannot be considered valid.
“Spain competes”
Likewise, the Government presented in December 2013 the project “Spain competes: in the company and in sport”. It is a program to promote cooperation between Spanish and amateur and professional sports. The initiative was born from the collaboration between businessmen, athletes and the Higher Sports Council (CSD).
This program generates the commitment between the CEOE, the CSD itself and the Association of Athletes, to carry out certain events and actions oriented to the impulse and projection of the Spanish SMEs s at the national and international level . In addition, it seeks the empowerment of young sports talents and the incorporation of athletes in the company. Also, it foresees the promotion of the entrepreneur as a growth engine associated with the values of sport.
Any company that associates your image to an athlete can get a fiscal deduction in the Corporation Tax. In this case, the deductible percentage is 40%for contributions below € 50,000. These actions must be considered as priority patronage activities . In addition, more intangible, the company will also see considerably increased the exposure of its brand.
Some events considered as priority patronage activities are: the departure of the Volvo Ocean Race in Alicante, the 2018 Tarragona Mediterranean Games or Barcelona Equestrian Challenge, among others.
These measures can be very useful for startups, SMEs and large companies. The benefit of these actions is a return, tangible and intangible , for the link with activities of great media interest. You can request more information about it info@verumasesores.com
