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Spain offers very attractive fiscal incentives for companies that wish to project themselves in the national and international field through sporting values.
There are three main ways to financially participate in sports activities:
(I) Donations and contributions, (II) Agreements for business collaborations provided for by the Act 49/2002, of 23rd December, on fiscal regime for non-profit organisations and on fiscal incentives for patronage (hereinafter the “Patronage Act”), and (III) Advertising Sponsorship Contract regulated under Act 34/1998, of 11th November, on General Advertising (hereinafter the “Advertising Act”).
In the first case, the benefactor helps the recipient financially, receiving nothing in return, while the latter two cases imply a sponsoring compromise to spread partner’s entity. The fiscal treatment may be more or less interesting based on the option chosen.
According to the Patronage Act, legal persons that make donations and contributions in favour of entities indicated in said Act, including Spanish sports federations and those in the autonomous regions, the Spanish Olympic Committee and the Spanish Paralympic Committee, can benefit from a 35% deduction of the Company Tax’s gross tax charge, even from a 40% deduction if, on the previous two tax periods, donations and contributions were made, entitled to deduction in favour of the same entity for equal or larger sum (on each one of them).
Furthermore, each year, the Spanish Budget Act foresees activities and sports events that are considered as priorities of patronage due to its exceptional public interest and those to which special fiscal benefits apply. In these cases, donations and contributions can benefit from up to 40% deduction, and even to 45% if during the previous two tax periods donations and contributions were made, entitled to deduction in favour of the same entity for equal or larger sum (on each one of them), with a limit of 50,000 euros yearly for each contributor.
On the other hand, unlike the donations and contributions, by means of a business collaboration agreement in general interest activities, the beneficiaries referred by the Patronage Act, in return for the financial support to carry out its activities, compromise to spread the collaborator’s participation in such activities, not constituting a supply of services. Expenses derived from such agreements will be regarded as expenses deductible for the purpose of determining the taxable amount of the collaborator’s corporation tax.
Finally, it must be considered that the indicated deductibility of the expenditure is not compatible with the deduction of donations described. Consequently, an analysis of the way that concerns the most must be carried out for each case.
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