BlogContracts & TransactionsLegal ResourcesDonation v Sponsorship

September 8, 20220
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What is sponsorship?

 

Sponsorship consists in the provision of unpaid assistance of a financial and material nature in favor of a natural or legal entity, for the performance of a social and public activity designated by the sponsor. 

Through sponsorship, financial or material assistance can be provided for the development of activities of humanitarian, cultural, educational, artistic, scientific, sports, ecological, literary, encyclopedic and educational character. 

Sponsorship takes legal effect when a contract is concluded between the sponsor and the beneficiary of this sponsorship. Usually the legal form with which the transfer of ownership is dressed, in these cases is the donation contract.

 

What are the similarities between donation and sponsorship?

 

Sponsorship has some legal restrictions which do not exist in the case of donation. It can be said that sponsorship is closer to conditional or burden donation, but the condition has a special nature. Sponsorship and donation are both free of charge, because any sponsorship made for the purpose of achieving an economic benefit by the sponsor is prohibited. They have the same humanitarian purpose, because through them financial or material assistance is given to a certain subject.

 

What are the differences between donation and sponsorship?

 

Sponsorship differs from donation in the following ways:

  • Starting from their subjects, the sponsor can be only a natural or legal person, local, foreign or with joint capital that has the quality of a trader. Budget entities and those that benefit from budget funding cannot be sponsors. Whereas donation recognizes no restrictions as to the person who may appear as a donor;
  • Based on the purpose for which they are performed, sponsorship is performed only in favor of the activities provided by law and can not be performed for other purposes. While the donation can be made in favor of any kind of activity or entity without any legal restrictions.
  • When the sponsor is a natural or legal entity that pays profit tax, it benefits for the sponsored amount a deductible expense up to 4% of profit before tax. When the entity pays the tax as a small business, the sponsored amount is deducted up to 1% of taxable income. The donation has no tax benefits in favor of the person making the donation.

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