Sponsorship tax relief – benefits and qualification rules

The Polish Deal amendments have introduced many controversial solutions that HR and accounting departments have to deal with since the beginning of 2022.

As compensation for the various increases (for example the basis for the amount of health insurance contributions), the legislator has offered new reliefs that taxpayers are entitled to – depending on the fulfillment of certain criteria. This group includes pro-family relief, rehabilitation relief, innovation relief, or relief for the middle class, about which we wrote a separate article.

The sponsorship tax relief is a completely new form of financial support that is available to entrepreneurs when they engage in CSR (Corporate Social Responsibility) activities.

In general, CSR activities concern support in the fields of sport, culture, and local activities that fall within the scope defined by the ISO 2600 standard of the International Standardization Organization. An example of activities that will qualify the entrepreneur for the relief may be supporting local institutions, cooperation with local organizations, programs for children and youth, environmental activities, as well as investments (e.g. road building). Moreover, pro-ecological activities, social and employee campaigns, and volunteer work. More information on this subject can be found on the PARP website.

But one must remember that the Law introducing the sponsorship relief indicates only three fields of activity that will be taken into account during tax deductions:

• sports activities – sports scholarships, sponsorship of sports clubs, organization of events;
• organization of cultural activities – support for cultural institutions entered in a specific register, art academies, and public art schools;
• support for higher education and science – scholarships.

Who is eligible for the sponsorship tax relief?

The new form of financial support is available to a wide range of recipients without hidden exclusionary factors, in particular for:

• PIT payers who obtain income from non-agricultural business activity, the income from which is taxed on general principles according to the tax scale or with a flat rate,
• CIT payers who obtain revenues other than revenues from capital gains.

The principle of the sponsorship tax relief

According to the Act, the cost of CSR activities undertaken can be later deducted from the tax base in the total amount of 150% of the costs incurred, in the scheme below:

• 100% of the amount allocated to the CSR initiative can be deducted as a tax-deductible cost,
• then 50% of the amount allocated to the CSR initiative will be eligible for a sponsorship discount.

The deduction is made in the tax return for the tax year in which the costs were incurred. The taxpayer is obliged to submit information on the incurred CSR costs in the form of a listing.

The amount of the deduction cannot exceed the amount of income earned by the taxpayer in the given tax year (income other than income from capital gains).