Sponsorship Relief – Double Benefits for Entrepreneurs

Sponsorship relief is one of the mechanisms that can significantly reduce tax liabilities for entrepreneurs. Introduced some time ago, it allows a deduction of 50% of the costs incurred on sports, cultural, and higher education or scientific activities from the taxable base. While the concept seems straightforward, in practice, there are many doubts and new interpretations issued by the tax authorities, which show that things are not always as simple as they seem.

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What is sponsorship relief all about?

In a nutshell, it’s the possibility of deducting half of the expenses incurred by the entrepreneur on supporting sports, cultural, or educational and scientific activities. This means the entrepreneur can not only recognize the full amount of these costs as deductible expenses but also additionally deduct 50% of that amount from the taxable base – a significant financial boost.

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The entrepreneur’s dilemma and tax office inquiry

This was precisely the question posed by an entrepreneur who entered into a sponsorship agreement with a sports club as part of his sole proprietorship. The agreement involved advertising services provided by the club in return for a lump-sum payment, the amount of which depended on the scope of the advertising package offered by the club. In exchange for the funds transferred, the sports club agreed to promote the entrepreneur’s business – helping to reach a wider audience and gain new customers.

The entrepreneur wanted to know whether these expenses could be considered tax-deductible and whether he was entitled to apply the sponsorship relief.

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Double benefit – tax authority’s position

The tax authority confirmed the entrepreneur’s approach. Since the sports club uses the funds entirely for purposes specified in the PIT Act (such as purchasing sports equipment or paying coaching staff) and the entrepreneur’s expenses are linked to his business activities, the entrepreneur can:

✅ classify the entire expenditure as tax-deductible costs,

✅ additionally deduct 50% of these expenses as part of the sponsorship relief.

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Why is it so advantageous?

This interpretation shows that sponsorship agreements with sports or cultural organizations can be particularly beneficial. They not only provide effective advertising opportunities and access to new customers, but also offer the chance to deduct the expenses twice – once as costs of earning revenue and once as part of the sponsorship relief.

As a result, the entrepreneur can significantly reduce tax liabilities while gaining tangible promotional benefits. It’s important to always verify whether the sponsorship agreement and the spending of funds by the club or organization meet the requirements set out in the PIT Act.

➡️ Individual interpretation by the Director of the National Tax Information issued on October 28, 2024, reference (polish) 0115-KDIT3.4011.738.2024.2.AD