Invoice for sponsorship?
In addition to membership fees and donations, many clubs use so-called sponsoring for their financing. While receipts are sufficient as evidence for the first-mentioned sources of funding, sponsors have to issue invoices. What is important here?
In contrast to donations or advertising, sponsoring in the form of money or a donation in kind is a real consideration for the sponsoring company. How do benefits in kind have to be accounted for correctly?
Sponsoring - advantages for club and company
Non-profit associations and companies have different tax requirements when it comes to sponsoring.
- It is quite possible that one party can take advantage of tax breaks while the other cannot. The tax-privileged association can be subject to sales tax despite an exemption from income tax.
- For companies, sponsorship money or contributions in kind only make sense if they can deduct them as business expenses. For the non-profit association, the focus is on not having to pay tax on the services of its sponsor.
- Please note: Charitable organizations and companies are treated independently of each other and differently for tax purposes. When designing sponsoring measures, the goal is usually: A company must be able to deduct the services as business expenses; for the non-profit association they should remain without taxation.
Input tax deduction is a good thing. Not everyone is entitled to do so. To the Treasury to ...
So the association has to issue invoices
As an entrepreneur, you should use other effective advertising options, such as sponsorship, in addition to an advertising campaign. Here you make payments to non-profit associations, for example sports clubs or traditional costume clubs or other organizations. One question arises at the latest in connection with invoicing. Which sales tax rate actually applies?
- The applicable sales tax rate always depends on the agreed service (advertising or tolerance service). Specific advertising services are those that you receive for sponsoring payments. This includes jersey, perimeter and loudspeaker advertising. In accordance with the Value Added Tax Act, you have to pay 19 percent in the invoice value added tax identify.
- It looks different with a mere tolerance performance. Then you can show 7 percent sales tax on the invoice. In this context, the sales tax law mentions, for example, the inclusion of the company logo in the association magazine or the use at an event without the sponsor being named.
- An example should make this clear: You agree with a sports club to provide certain services as a sponsor. The club jerseys, however, already indicate a sponsor. All you have to do is display the company logo in the association news.
- The sports club charges 5,000 euros plus 950 euros sales tax per year. The calculation is incorrect or disadvantageous for the company from a tax point of view. For the tax authorities, this type of sponsorship is a mere toleration service. This means that the maximum input tax deduction is only 350 euros (7 percent of 5,000). Your input tax would Tax office ultimately cut by 600 euros.
A supporting company is not always entitled to deduct input tax. These include insurance companies, credit institutions and healthcare entrepreneurs, or certain small business owners, among others. If you want to keep sales taxes low, you have to concentrate on sponsorship services that are as tax-free as possible.
