Just as regular Romanian citizens can redirect 2% of their income tax to the registered non profit association of their choice, Romanian companies that want to sponsor a cause, can redirect up to 20% of their taxes but no more than 3 thousandth of the total fiscal value of the company.
20% Sponsorship (Companies only)
Sponsorship Law in Romania
Companies can sign up for the 20% sponsorship at no cost to them.
Basically the 20% sponsorship will go toward the non profit association of their choice instead of going to the state. It’s a way to make sure that at least 20% of your company’s tax will not go toward dog-catching activities nor will it feed the death machines called public shelters. Instead, the 20% of your company’s income tax will make a difference in the life of unlucky animals and it will help reduce the number of abandoned and suffering animals on the streets.
- Total fiscal value of your company for year 2017 is 100,000 RON.
- Spendings: 80,000RON
- Profit: 20,000RON
- Tax: 3200RON (16% of the 20,000RON profit)
- Out of 3200RON, a maximum of 20% can be donated which is 640RON
- 3 thousandths of the total fiscal value of 100,000RON is 300RON
Conclusion: your company can sponsor your non profit association of choice with 300RON only for fiscal year 2017.
The sponsorship is done before paying the tax to ANAF and this can result in procedural complications.
Let’s suppose that your company decided to sponsor a non profit association with 200RON. Later on, the company’s accountant informed you that your company owes only 500RON in taxes to ANAF instead of the projected 1000RON. That means your company can sponsor only 100RON (20% of 500RON) for that year.
The extra 100RON that you sponsored the non profit association can be considered a fiscal credit with ANAF and it will be spread in 7 yearly installments. Basically in the next 7 years your company will pay less tax by 1/7 of a 100 or 14.28RON.*
* Consult a certified accountant to confirm this information.
Did you know...
- Only 1 in 5 Romanian companies use the Sponsorship Law to help a cause or a non profit association (NGO)
- The sponsorship can be made in products as well, not just monetary.
- Out of all the companies that sponsor non profit association, less that 1 in 5 chose to sponsor associations that help homeless animals.
- The due date for applying for 20% sponsorship at ANAF is December 31st of each year (unlike citizens who can apply for the 2% tax redirection by May 25th of each year).
- The sponsorship amount has to be smaller than 3 thousands of the total fiscal value of the company, but no larger than 20% of the tax owed to ANAF.
- The sponsorship sum is considered fiscal credit, not a deductible business spending. The sponsorship sum does not affect the tax bracket in which the company may fit.
Thank you on behalf of the dogs!
ANAF is the national Romanian entity that is in charge of setting and collecting taxes. Click here for more information.
Sponsorship Law applies only to companies that are registered and operate on Romanian territory.