However, Romanian legislation recognizes that there are other organizations, besides the state, that can have a positive influence on collective good. Any company in Romania may decide to redirect up to 20% of its corporate income tax or micro-enterprise tax to a non-profit entity as sponsorship. The state will always receive the remaining 80% (minus any other possible tax reductions). Moreover, if the amount granted in one year exceeds the 20% threshold, the difference can be fully recovered from the tax payable in the following 7 years. The fields of activity of non-profit entities are increasingly varied. The efficiency of these entities, in areas such as education, social protection, health, sports, arts and the environment, is well known, while the number of people interested in volunteering seems to be rising. And yet, there are still companies that have so far not considered sponsorship, or they do so to a very limited extent. Maybe because this tax treatment seems too good to be true? Don’t let a benefit become a risk In order to benefit from this incentive, certain conditions must be met - but the conditions are, in principle, clear and easy to fulfill. Starting 2019, a requirement has been introduced for companies to declare to the Tax Authorities (ANAF) any sponsorships they have granted (using Form 107). Moreover, the Ministry of Public Finance has the right to audit how the non-profit entities use the sponsorships received. These provisions have generated considerable discussion. However, we believe that they are beneficial, because they help limit abusive (or even illegal) use of sponsorship. Furthermore, starting from April 2019, companies may only benefit from the sponsorship tax incentive if certain beneficiaries of the sponsorships are enrolled in the Registry of entities / religious organizations for which such tax deductions are granted (which is shown on the tax authorities’ website). In addition, a number of other relevant factors need to be considered when sponsorship is carried out, such as issues relating to the legal provisions governing sponsorship, the form of the contract, or the beneficiary of the sponsorship. Sponsorship About how you can have a positive influence without fiscal risks No country can function without taxes. In the absence of a tax system, the state cannot provide public services such as health, security, education and infrastructure. How can KPMG help? Providing details on the requirements for sponsorship, how the enrollment in the Registry of entities / religious organizations for which tax deductions are granted must be carried out, and giving assistance with completion of the relevant documentation. An analysis of the fulfillment of the conditions required by law for a sponsorship to be eligible for the tax credit. Assistance in drafting the necessary documentation, including related contracts. Advice on what needs to be done and what should not be done in connection with sponsorship. Verifying, with the consent of the non-profit entity in question, how the use of the sponsorship received is used. Filing the informative tax return (Form 107) detailing the sponsorship and issuing a tax opinion on this tax return.
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However, Romanian legislation recognizes that there are other organizations, besides the state, that can have a positive influence on collective good. Any company in Romania may decide to redirect up to 20% of its corporate income tax or micro-enterprise tax to a non-profit entity as sponsorship. The state will always receive the remaining 80% (minus any other possible tax reductions). Moreover, if the amount granted in one year exceeds the 20% threshold, the difference can be fully recovered from the tax payable in the following 7 years.The fields of activity of non-profit entities are increasingly varied. The efficiency of these entities, in areas such as education, social protection, health, sports, arts and the environment, is well known, while the number of people interested in volunteering seems to be rising.And yet, there are still companies that have so far not considered sponsorship, or they do so to a very limited extent. Maybe because this tax treatment seems too good to be true?
Don’t let a benefit become a riskIn order to benefit from this incentive, certain conditions must be met - but the conditions are, in principle, clear and easy to fulfill.Starting 2019, a requirement has been introduced for companies to declare to the Tax Authorities (ANAF) any sponsorships they have granted (using Form 107). Moreover, the Ministry of Public Finance has the right to audit how the non-profit entities use the sponsorships received. These provisions have generated considerable discussion. However, we believe that they are beneficial, because they help limit abusive (or even illegal) use of sponsorship. Furthermore, starting from April 2019, companies may only benefit from the sponsorship tax incentive if certain beneficiaries of the sponsorships are enrolled in the Registry of entities / religious organizations for which such tax deductions are granted (which is shown on the tax authorities’ website). In addition, a number of other relevant factors need to be considered when sponsorship is carried out, such as issues relating to the legal provisions governing sponsorship, the form of the contract, or the beneficiary of the sponsorship.
SponsorshipAbout how you can have a positive influence without fiscal risks
No country can function without taxes. In the absence of a tax system, the state cannot provide public services such as health, security, education and infrastructure.
How can KPMG help?
Providing details on the requirements for sponsorship, how
the enrollment in the Registry of entities / religious organizations for which tax deductions are granted must be carried out, and giving
assistance with completion of the relevant documentation.
An analysis of the fulfillment of the conditions required by law for a sponsorship to be
eligible for the tax credit.
Assistance in drafting the necessary documentation, including related contracts.
Advice on what needs to be done and what should not be done in connection with
sponsorship.
Verifying, with the consent of the non-profit entity in
question, how the use of the sponsorship received is used.
Filing the informative tax return (Form 107) detailing
the sponsorship and issuing a tax opinion on
this tax return.
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René Schöb
Partner, Head of Tax & [email protected]
Daniel Pană
Cristina Spirescu
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