Prepared by Pasquale Salvatore e Raimondo Rossi
The “August Decree” (art. 81, DL. 104/2020, to be converted into law within 13.10.2020) has introduced a specific tax credit available for entities who execute advertising investments with leagues, sport clubs and associations meeting certain specific conditions.
The favourable provision, as reported in Explanatory Notes to the August Decree, is aimed at promoting entities who intends to execute advertising campaigns carried out by leagues and sport clubs and associations, involved in the youth sports sector and respecting specific thresholds. Indeed, the sport industry, in particular at local level, is characterised by a high visibility and a relevant social function, for example in the field of sport for youths and woman. This industry is facing a difficult phase in the context of the COVID-19 emergency, that could taint its business continuity on the medium term.
In this context, as provided for other specific industries (such as for publishing), the introduction of a tax incentive to invest in advertising is aimed at enhancing a virtuous circle in which promotion and sponsorship can contribute to the support of the entities operating therein (for example, for publishing industry, reference could be made to art. 57-bis, DL n. 50/2017 that introduced a tax bonus for advertising investments made with newspapers, periodical and TV-radio, specifically improved in 2020 due to the COVID-19 emergency).
Subjective conditions to benefit from the tax credit
The new tax credit can be benefitted by companies, self-employed individual and non-commercial entities that carrying out investments in sport advertising campaign, including sponsorships, for an amount not lower than euro 10,000, with one of following entities:
- leagues that organise team national championships in Olympic disciplines; or
- professional and amateur sports club enrolled in the Italian Official CONI register, operating in Olympic Games disciplines and performing youth sport activities (situation to be certified by the sport team). Moreover, the sport clubs shall have accounted revenues produced in Italy related to fiscal year 2019 between € 200,000 to € 15,000,000. Entities that are subject to the regime provided by Law n. 398/1991 are excluded.
Amount of tax credit and resources available
The tax credit is set at 50% rate of the investment in advertising activities executed from 1st July 2020 to 31st December 2020.
The tax credit shall be used to offset other taxes and charges due by the sponsor (art. 17, DL n. 241/1997).
The tax credit can be benefitted by the sponsor in the maximum amount provided by de minimis State aid regulation, circumstances that could allow the possibility to consider the tax credit along with the other measures provided by the “temporary framework” adopted by UE Commission.
The overall basket of resources available has been set in euro 90 million: if this threshold is met, it is then provided for a distribution of the resources among beneficiaries in proportion to the tax credit theoretically due.
Execution of the investments
The tax credit is recognized as long as the relevant payments are made through bank or postal transfers or with other traceable payment systems, in order to establish a direct connection between tax authorities and the taxpayers.
The actual form for the communications and reporting of the investments actually made are delegated to a specific implementing Decree of the President of the Council of Ministers, on a proposal from the Ministry for Youth Policies and Sport with the Minister of Finance.
Tax qualification of the investments
It is expressly provided that the investments accounted by the sponsor for the sponsorship activity constitutes an advertising expenditure in the hands of latter, being aimed at promoting the image, goods or services of the sponsor through a specific activity of the sports teams.
The tax classification of sponsorship should define the proper tax treatment of the expenses incurred for sponsorship activities, with a greater level of clarity in the definition of the related tax treatment in the hands of the sponsor, in line with the provision stated for the sponsorship activities with amateur sports clubs (art. 90, L. 289/2002) and to the consolidated approach of the jurisprudence (e.g. Supreme Court decisions n. 15179/2020 e 14626/2020).
For a deeper discussion, please contact:
PwC TLS Avvocati e Commercialisti
PwC TLS Avvocati e Commercialisti