SUSTAINABILITY SCHOOL #51 - Sponsorship amidst the tax amendments
Description
At the end of September 2022, a new order from the President of ANAF (National Agency for Fiscal Administration) was published, approving the procedure for redirecting profit/income tax for sponsorships. The private sector's contribution to the development of NGOs may no longer appear as an expense in financial statements, as the amounts allocated for sponsorships can be redirected by taxpayers after they have already been paid either as profit tax or as micro-enterprise income tax. This change will thus lead to an increase in the funds that non-profit organizations can benefit from, as the sponsorship limits were only partially used under the previous system.
What You Will Learn
Current Challenges in Sponsorship: In 2020, significant amounts eligible for community investment through sponsorship were underutilized, with only a fraction being redirected by individuals and companies;
Reasons for Low Sponsorship Levels: Factors include lack of awareness about fiscal benefits, misalignment between NGO goals and corporate objectives, and complex credit mechanisms discouraging large companies from sponsoring;
Recent Fiscal Changes (Law 322/2021): New provisions aim to encourage partnerships between companies and NGOs, enhancing corporate investment in community projects through improved sponsorship mechanisms;
Sponsorship Contracts and Requirements: Sponsorships must be formalized with a written contract, specifying details such as the sponsorship’s objective, value, and duration. Strict guidelines exist to ensure these contracts meet legal standards;
Tax Benefits and Limitations: Sponsors benefit from tax credits but must adhere to specific limits: 0.75% of turnover or 20% of the owed profit tax. Starting in 2022, unutilized sponsorship amounts can no longer be carried forward;
Directing Additional Sponsorship Post-Fiscal Year: New regulations allow companies to redirect unallocated tax amounts up to the maximum credit limit, even after the fiscal year has ended, by submitting Form 177;
Restrictions on Sponsorship Agreements: Certain contractual obligations common in other countries, such as IP rights or mandatory event participation, may void the fiscal benefits in Romania if they conflict with local sponsorship laws;
Fiscal Reporting and Transparency: Sponsorships impact operational costs and may initially appear as a negative financial impact in group reporting. Companies can highlight tax reductions to offset this effect;
Eligible Sponsorship Beneficiaries: Nonprofit entities in various sectors (education, arts, sports, social services, environment) and public institutions can receive sponsorship, provided they are registered as eligible entities;
Comparative Efficiency of Tax Credit: Tax credits on sponsorships offer a distinct advantage over ordinary deductions, though the fiscal impact on financial statements can affect a company’s internal sponsorship strategy;
Speaker
Ruxandra Jianu
Partener within Biris Goran Consulting
79,95 lei/year
This course also includes:
- 12-months access
- Self-paced learning
- Downloadable resource