Sponsorship of prominent team sports

In this information sheet we would like to outline the tax saving opportunities inherent in the sponsorship of so-called prominent team sports (football, handball, basketball, water polo, ice hockey).

As a tax consultancy firm why do we recommend sponsorship of prominent team sports?

Since 1 July 2011, the sponsorship of prominent team sports has not only been one element of corporate social responsibility on the part of market players but also a new form of corporate tax relief which, with the appropriate planning, can result in significant savings.

Who is this proposal aimed at?

We put forward this proposal specifically for those taxpayers who – based on expected results for 2012 – face a significant corporate tax bill, since the saving can be claimed in the form of tax relief.

What level of saving can be achieved through sponsorship of prominent team sports?

The non-refundable support on the one hand, as an expenditure, reduces the sponsor’s final balance sheet result and, on the other hand, the total amount of funding can be charged against corporate tax, thus it reduces the sponsor’s corporate tax liability. The saving is 10% of the sum of funding, respectively 19% for taxpayers with a tax base exceeding HUF 500 million.

How does the saving achieved through prominent sport sponsorship work out?

Let’s assume that the projected corporate tax liability of a taxpayer in 2011 is the following:

If the taxpayer sponsors a sports body that holds entitlement to receive sponsorship, then the corporate tax liability changes in the following way:

The reduction in taxation achieved as a result of sponsorship works out thus:

Who is eligible for support?

Funding can be provided to the following organizations active in prominent team sports under the designated chapters:

* Through the federation

The following are required to achieve the savings (inter alia):

1. selection of sports organization complying with the provisions and with an approved sport development programme;
2. statement in the sponsorship contract that the sponsor is not entitled to receive any form of counter-performance;
3. procurement of the sponsorship certificate issued by the sports directorate body or federation; furthermore
4. the prevision of funding within the year
   - in the case of pre-financing - with transfer to specified independent bank accounts available for entitelements defined in the sponsorship 
     certificate
   - in the case of sponsorship with post-financing - with transfer to a segregated bank account to be opened with the sport directorate body or
     national sporting federation.
5. The sponsor is entitled to take advantage of the tax relief only after despatch to the state taxation authority of the sponsorship certificate and bank record proving transfer.

Why is it worth approaching us with regard to arranging sponsorship of prominent team sports?

1. Our specialists can help assess your projected corporate tax liability, and then determine the optimal sum of sponsorship for your particular case. 
2. Our company will assist you in deciding what sum of sponsorship can be certified under which chapter, based on the sport development programme of the body receiving funding, which thus guarantees that our clients are able to claim tax relief on 100% of the amount of sponsorship they have committed. 
3. We draft the contracts of sponsorship complete with the necessary specificities and, where requested, we can also assist in coordinating the contracting process. 
4. We work on behalf of our clients to obtain issuance of sponsorship certification.
5. We undertake to handle all the administration associated with the taxation relief, therefore our clients do not have to struggle with possible issues arising in relation to the validation of the tax relief.