For taxpayers who are expected to incur corporate tax liability based on their anticipated results, it is worth taking advantage of the option of corporate tax donation in order to achieve tax savings.
In this way, their businesses can support spectator team sports while reducing their corporate tax liability without negatively impacting the business results.
Benefits:
- In the case of a tax subsidy, the company’s result remains unchanged since the tax subsidy is not an expense. The amount of taxes paid is used to provide the subsidy, so it is also tax-related.
- The Revenue Agency (NAV) transfers the subsidy to the beneficiary or beneficiaries.
- The taxpayer is entitled to a credit for the committed and transferred amount, which is transferred by NAV to the taxpayer’s tax account, the corporate tax account, as a deduction.
- The tax credit received for the committed amount is not taxable income in the following year, so the tax credit does not affect the result of the current year and improves the result of the following year.
- The taxpayer can choose between two forms of proposal: the advance tax and the annual corporate tax.
- For subsidies made to support sports corporations, the certificate is sent directly to the Revenue Agency by the issuer of the certificate. The taxpayer does not need to attach the certificate to their application.
- Regardless of the subsidy, the taxpayer fulfills the obligations of advance payment and payment of taxes according to the general rules, meaning they must pay them on time, so there are no changes in this regard either.
The taxpayer can participate in subsidizing for the following beneficial purposes:
- Subsidy for film production
- Subsidy for sports organizations (for sports organizations in football, handball, basketball, water polo, ice hockey, and volleyball).
As a general rule, the taxpayer is not entitled to receive any compensation from the beneficiary organization for the subsidy provided.
Amount of tax credit:
- In the case of subsidies on tax advances, the credit is equal to 7.5%, up to a maximum of 7.5% of 80% of the annual tax due.
- In the case of subsidies made against annual tax, it’s 2.5%, up to a maximum of 2.5% of 80% of the annual tax due.
In both cases, the lesser amount is considered as the credit. In the case of subsidies to sports corporations, 99% of 87.5% transferred to beneficiaries constitutes the base for the credit. For tax advance donations, a tax credit of 6.49% is available, while 2.16% is the tax credit recognized by tax authorities in corporate income tax for subsidies made in the annual income tax return.
If you wish to subsidize a sports corporation, we invite you to consult our experts for the review of the necessary documents for the tax subsidy:
- Selecting a sports organization that meets the requirements;
- Obtaining a certificate related to the subsidy from the sports administrative body or professional association, as only taxpayers exempt from public liability can make a subsidy;
- Verification of their exemption from public liability is required;
- Preparation and submission of a tax subsidy application to the tax authorities.
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