Sponsorship is one of the ways in which a company can support non-profit entities and, at the same time, benefit from tax incentives. However, the correct application of these provisions requires compliance with clear conditions imposed by the Tax Code and secondary legislation. In this article, we explain in detail how to declare sponsorship, how to redirect corporate income tax and the important deadlines in 2025.
- Deductibility of sponsorship expenses
According to Art. 25 para. (4) lett. i) of the Tax Code, sponsorship and/or patronage expenses are not tax deductible, but may be deducted from the corporate income tax due, within certain limits. These are:
- 75% of turnover;
- 20% of the corporation tax due;
The lower of the two applies.
It is essential that the entity benefiting from the sponsorship must be entered in the Register of entities/units of worship for which tax deductions are granted at the time the sponsorship contract is concluded.
- Redirection of unused corporate income tax
If, at the end of the year, the full amount deductible for sponsorship has not been used, taxpayers have the right to redirect the remaining corporate income tax, up to the amount of unused tax, until the legal deadline for filing the annual corporate income tax return.
This facility is governed by Art. 42 para. (4) of the Tax Code and is possible only by means of form 177 – Request for the redirection of corporate income tax, in accordance with OPANAF No 3562/2024.
The redirection is valid only if, at the date of payment by ANAF, the sponsored entity is entered in the aforementioned Register.
- Calculation of the amount that can be redirected
Taxpayers can redirect the remaining amount of the maximum deductible limit, after subtracting:
- amounts already granted as sponsorship/ patronage;
- amounts carried over from previous years;
- any tax concessions (exemptions, tax credits).
Attention! Redirection is not possible if the income tax has been calculated according to the minimum turnover tax regime.
- Who makes the payment and how is the record kept?
The actual payment of the redirected amount to the beneficiary entity is made by the competent tax authority , not by the taxpayer. The redirected amounts are not reflected in the company’s accounting records or annual financial reports.
For the redirection to be valid:
- the taxpayer must have no outstanding corporate income tax liabilities;
- Form 177 must be correctly completed and accompanied by the sponsorship contract.
- Important deadlines for the 2024 tax year
For 2024 sponsorships, the following deadlines must be met:
- By 31 December 2024 – Direct sponsorships must be made to qualify for the deduction during the year;
- By 25 June 2025 – filing:
o Income Tax Return 101;
o Form 177 to redirect the remaining amount.
These deadlines are regulated by OUG No 153/2020, which establishes a unitary deadline for declaring and paying corporate income tax.
- Practical recommendations
- Check before sponsorship that the beneficiary organisation is registered in the ANAF register.
- Calculate the maximum deduction limit correctly (0.75% of turnover / 20% of corporation tax).
- Don’t wait for the deadline: organise sponsorships or redirections in advance to avoid errors or rejections.
- Keep all supporting documents: sponsorship contract, proof of registration, form 177,
Conclusion
The mechanism of sponsorship and corporate tax redirection provides an effective way for companies to contribute to the community good and support relevant causes with minimal tax impact. Compliance with the legal framework and deadlines is essential to optimise the benefits of these incentives.