The sponsorship law along with the Tax Code allows companies to allocate up to 20% of the tax to NGOs. If the sponsored amount does not exceed 0.3% of turnover, the tax payment will decrease by the full amount of the sponsorship.

Example of calculation

Turnover = 100,000 lei
Expenses = 80,000 lei
Taxable profit = 20,000 lei
Tax related to this tax (16%) = 3,200 lei
0.3% of turnover = 300 lei
20% tax = 640 lei

Therefore, you could sponsor up to 300 lei so that the full value of the sponsorship to be deducted from tax payments. 

Finally, the tax will be paying 2.900 lei instead of 3.200 lei.

Keep in mind the following:

The sponsorship must be accounted for in the year of the tax pay (the prior year of  the actual payment time)
A company has also the right to sponsor beyond the limits mentioned above, but for the amount exceeding the limit, a tax will be paid.
"In terms of sponsorship, the provisions of the article 31 par. (4) - (5) of the Act nr.571/2003 Fiscal Code are applicable to all taxpayers paying income tax, regardless of the sources from which they derive income, from Romania or abroad ".

Although the Tax Code permits since 2004, that companies redirect 20% of the state income tax due to an NGO without any additional expense, very few companies make use of this facility. The total amount that could be redirected by Romanian companies amounts to 3-400 million euros annually.

"Pursuant to Law no. 32/1994 regarding sponsorship , as amended and supplemented, in conjunction with ` Title II - Income Tax Law . 571/2003 regarding the Fiscal Code, businessmen / companies could divert 20% tax on profits, due to ... " ... E.M.M.A. Organization
"The legal entity must necessarily make a profit. Sponsorship should not exceed 3 ‰ of turnover and 20% of tax. It should be operated in the accounts until the end of the income tax statement."

Thus, 20% of tax companies can be redirected to an NGO that supports a social cause, without being affected in any way their budget.
To be deducted from income tax for the fiscal year 2014, the amount diverted cannot be more than 3‰ of turnover and payments must be made by 31 December.
The procedure by which firms can divert some of their tax return consists of signing a sponsorship contract with the NGO, which represents the cause that the managers and entrepreneurs want to support.

The contract can be downloaded using the button below.

If you don’t sign such a sponsorship contract until December 31, the money must turn to the state budget.


   Sponsorship Contract 


Submit to DeliciousSubmit to DiggSubmit to FacebookSubmit to Google PlusSubmit to StumbleuponSubmit to TechnoratiSubmit to TwitterSubmit to LinkedIn