In 2022 corporate tax and tax advances can still be offered for sports grants or film production, so that the taxpayer who makes the offer can receive tax refund. It is worth reconsidering the requirements and the pitfalls of the offer at the beginning of the year in order to make the most of the opportunities offered by the tax refund.

If the taxpayer, using the option provided by law, makes an offer to support film production or team sports from the amount of either the tax advance for the tax year or the annual corporate tax in accordance with legal provisions, the tax authority shall send the amount to the beneficiary organization and the taxpayer is entitled to a tax refund in respect of the amount transferred.

The maximum amount that can be offered is 80 percent of the tax advance or 80 percent of the amount of tax payable in the case of an offer charged to the annual tax.

if the offer is made from the upcoming tax advance in 2022, it can be made on Form 22RENDNY. An offer can be made for more than one advance payment period. An additional condition is that the corporate tax advance must be paid by the due date. In this case, the tax authority will transfer the amount offered to the beneficiary within 15 days of the deadline for payment of the tax advance. In practice it means, for example, that in the case of a taxpayer with a monthly tax advance, the offer from the March tax advance must be made by 28 February and the tax advance must be paid by 20 March. In this case, the tax authority shall transfer the amount offered to the beneficiary organization by 4 April and inform the taxpayer thereof. If the taxpayer pays tax advances on a quarterly basis, the taxpayer must submit its declaration on the first quarterly advance by 31 March, the tax advance must be paid by 20 April and the tax authority provides the taxpayer with a certificate of the transfer to the supported organization by 5 May.

With respect to subsequent tax advances, declarations already made may be amended, but with respect to tax advances of previous financial periods, no amending declaration can be made. If the offer is made on the annual tax, it should be declared in the annual tax return. The offer declaration made on the annual tax cannot be amended later.

In the case of either a tax advance or an annual tax offer, it is important that, for example, for offers for sports purposes, the taxpayer should conclude a grant agreement with the sponsored sports organization before and should have a certificate issued by the national sports association of the sponsored organisation. With this certificate the national sports association certifies the legal titles of the offer made on the basis of the grant agreement and certifies the legitimacy of the offer. The objectives of the support may be, for example, the performance of youth education tasks, the personnel expenses of the sports organization, tasks related to training, or the support of the investment of tangible assets. 12.5 percent of the amount offered is additional sports support, and in the case of sports organizations, 99 percent of the remaining 87.5 percent is transferred to the sports organization.

The taxpayer is entitled to a tax refund on the amount calculated in this way and transferred to the sports organization. In the case of offers made from the tax advance, the amount of the tax refund is 7.5 percent of the amount transferred to the sports organization, and in the case of the offer made from the annual tax, it is the 2.5 percent of the amount transferred (it seems that it is better to make offers at the expense of the tax advance). Another important aspect is that the taxpayer is entitled to the tax refund only if the taxpayer is not entitled to compensation from the beneficiary organization and the 12.5% additional sports support, specified above, is covered with a grant agreement and not a sponsorship agreement.

By making an offer from the corporate tax, the taxpayer can achieve a significant amount of tax savings, therefore, it is recommended to make the offer already from the amount of tax advances for the organizations to be supported when tax schedule is planned.

Please contact our colleagues if you wish to have a detailed interpretation of this legislation as this newsletter offers general understanding.

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