Tax credit for sports sponsorship

It is indeed not easy to keep track here: the tax credit for sponsorship services in the field of sport introduced years ago is repeatedly extended on a sporadic basis. At present, businesses, self-employed professionals and non-commercial entities are granted tax credits of theoretically 50% of the expenditure on sports sponsorship in the following periods:

• in the first quarter of 2022, i.e. in the period between 1 January 2022 and 31 March 2022 (this pursuant to Art. 9 of Law Decree No. 4/2022),
• in the first quarter of 2023, i.e. in the period between 1 January 2023 and 31 March 2023 (Art. 1 para. 615 of Law 197/2022) and
• now also for expenditure in the third quarter of 2023, i.e. in the period between 1 July 2023 and 30 September 2023 (in this sense Art. 37 of Law Decree 75/2023).

For the expenditure in the 1st quarter of 2022, the tax credit may be applied for by 29 September 2023; for the relief in 2023, however, the form and the deadline for an application are still open.

Set out below, therefore, are for the time being the most important items of information on the credit for 2022, which may be applied for in the coming weeks:

First, as regards the allocation in time: for this allocation to the 1st quarter of 2022, the cash basis principle is applied as a matter of principle. It follows that: anyone who concluded a sponsorship agreement in the first quarter of 2022 but made the corresponding payment only after 31 March 2022 cannot now apply. Conversely: anyone who already had a multi-year contract concluded earlier (which may also extend beyond 31 March 2022) may claim the credit for the payments made in the period between 1 January 2022 and 31 March 2022, and this even where the payments made may partly relate to 2021 or 2023. Conversely, so-called FAQs clarify that payments in the 1st quarter of 2022 relating to contracts that concern only 2021 do not qualify; the contracts must in fact (also) relate to 2022. As regards payment, it is clarified that cash payments and also any set-offs (between liabilities and receivables) are strictly excluded.

In addition, it is provided that only expenditure with a minimum amount of 10,000 euro (excluding VAT) is eligible for the relief.

The tax credit amounts in principle to 50% of the expenditure. However, since a modest 20 million euro is provided for the entire measure in the 2022 budget, the actual rate of relief will in the end presumably be far below this threshold. At least the State guarantees a minimum grant of 5%, so that at least the costs of the application should be covered.

Recognised are the costs arising from sponsorship agreements not only with national sports federations and professional sports companies, but also with simple sports clubs that are registered with CONI and that practise sporting disciplines admitted to the Olympic Games and that additionally promote youth sport. Excluded, however, are contributions to clubs which themselves claim the flat-rate accounting regime under the so-called Sports Law (Law 398/1991). Moreover, the sports organisations supported must have achieved a turnover of between 150,000 euro and 15 million euro in 2019 and must also actually have carried out youth promotion activities; the reference to 2019 is justified by the coronavirus pandemic.

The application must, as mentioned above, be submitted by 29 September 2023 via the digital platform of the „Dipartimento dello sport“. On the relevant homepage, at

https://www.sportgov.it/sponsorizzazioni2022/it/home/www.sportgov.it/sponsorizzazioni2022/it/home/

you will first find a set of guidelines and a series of so-called FAQs, and the entire procedure can then be activated via this page. As a precaution, you should not rely on the deadline currently stated on the homepage (30.09.2023), since all other official guidance states 29 September 2023.

We recommend that you download the guidelines referred to above and strictly follow the steps set out therein when completing the application.

Please also note that the application must be digitally signed by the legal representative and by an expert (auditor, labour consultant or CAF).