SPONSORSHIP

What is a sponsorship agreement?

The essence of sponsorship is similar to donation, but it has distinctive features.

Sponsorship is a bilateral contract in which one party Sponsor provides financial support to organizations or individuals engaged in cultural, educational, research, sports, charitable or other activities, and the sponsored party undertakes to promote and advertise the sponsor and its activity on the way provided for in the contract. A specific event can also be supported through sponsorship.

Form of contract

A special form is required for the validity of the sponsorship contract, and in order to establish the rights and obligations of the parties, it is recommended that it be in writing.

Since there is no special legal regulation for the Sponsorship Contract, it falls under the scope of the so-called unnamed contracts. With it, the parties can freely determine the content of the sponsorship contract. The only condition is that they do not contradict the imperative norms of the law and good morals.

Parties to the sponsorship agreement

Any natural or legal person can be a party to a sponsorship contract.

Minors and persons who cannot manage their own actions cannot be sponsors, but they can be sponsored.

Tax treatment of sponsorship

In sponsorship, the person being sponsored provides a type of advertising service, in one form or another, that we may treat as an advertising service expense. However, when the costs that have been charged are not equivalent, but exceed the value of the provided advertising service, the amount of this excess is treated as a donation expense and here we must already comply with the conditions of Art. 31 of the Civil Code in order to recognize this expense for tax purposes.