Situation: A company liable for corporation tax, made in 2022 sponsorships below the corporation tax limit for that year.
Can this company redirect the difference this year and if so, what is the procedure?
Solution:
According to Article 42, paragraph (4) of the Tax Code, if the amount established according to Article 25 paragraph (4) letter i), reduced by the amounts carried forward, if applicable, has not been used in full, taxpayers may have their corporate income tax redirected, within the limit of the amount thus calculated, to sponsorships and/or acts of patronage or the granting of private scholarships, within a maximum period of 6 months from the date of filing the annual corporate income tax return, by submitting a redirection form(s).
In the case of taxpayers who are members of a tax group, redirection can only be ordered by the responsible legal person. The obligation to pay the redirected amount of corporate income tax lies with the competent tax body. The redirection of corporate income tax for the sponsorship of non-profit legal entities, including religious units, can be made only if the beneficiary of the sponsorship is registered, at the date of payment of the amount by the tax body, in the Register of entities/units of worship for which tax deductions are granted, according to article 25 paragraph (4^1). The procedure, model and content of the redirection form shall be established by order of the President of the A.N.A.F.
According to paragraph (4^1), if, after the submission of the redirection form, the corporate income tax due for the year for which the redirection was ordered is corrected in the sense of a decrease, and the taxpayers have redirected an amount higher than the amount that could be redirected, according to the law, they owe the state budget the difference in corporate income tax that was redirected in excess. The procedure for the determination and regularization of the difference in corporate income tax that has been redirected in excess of the amounts that may be redirected, according to the law, shall be established by order of the President of the A.N.A.F..
We underline the fact that the redirection of the corporate income tax for the sponsorship of non-profit legal entities, including religious units, can be made only if the beneficiary of the sponsorship is registered at the date of the payment of the respective amount by the tax authority in the Register of entities / religious units for which tax deductions are granted.
According to Article 77 of Law no.207/2015 on the Tax Procedure Code, as amended and supplemented, the deadline for resolving requests for the redirection of corporate income tax / income tax on microenterprises is 45 days after submission. For taxpayers who, at the date of submission of the application, have not paid the corporate income tax debt, the 45-day period starts to run from the date of payment of the debt.
We remind you that the redirection form – 177 “Request for redirection of corporate income tax/income tax on microenterprises” and the redirection procedure were approved by OPANAF 1679/2022 – published in the Official Gazette with number 923 of 21 September 2022.
In view of the above, the company that in 2022 made sponsorships below the legal limit, i.e. the minimum limit between the amount of 20% of the corporate income tax and 0.75% of the turnover, may in 2023 conclude sponsorship contracts and request the redirection of the difference by submitting form 177.The amount of the corporate income tax difference that can be redirected is calculated by subtracting the minimum amount established, according to article 25 paragraph (4) letter i) of Law no. 227/2015 on the Tax Code, as amended and supplemented, of the amounts representing sponsorship and/or patronage, private scholarships, granted to the beneficiary entities in the year for which the annual income tax return was filed, according to article 25 paragraph (4) letter i) and t), and the amounts carried forward, as entered in the form 101 “Income tax return” of that year.
In order to determine the corporate income tax limit provided for in article 25 paragraph (4) letter i) item 2 of Law no. 227/2015 on the Tax Code, as amended and supplemented, the amounts of the tax credit and the exempted/reduced corporate income tax shall be deducted from it, in accordance with the provisions of the Order of the President of the National Tax Administration Agency no. 3.386/2016 for the approval of the model and content of the forms 101 “Corporate tax return” and 120 “Excise tax declaration”, as amended and supplemented.
Legal basis:
-Fiscal Code (approved by Law no.227/2015, published in MO no.688 of 10.09.2015), as amended and supplemented;
-Tax Procedure Code (approved by Law no.207/2015, published in the Official Gazette no.547 of 23.07.2015), as amended and supplemented;
-ANAF Order no.1679/2022 for the approval of the Procedure for the redirection of corporate income tax/income tax on microenterprises, according to the law, for carrying out sponsorships and/or acts of patronage or granting private scholarships, as well as the model and content of some forms.