The "Official" Definition of Corporate Sponsorship

Sponsorship is the "material support provided, without direct compensation from the beneficiary, to a work or a person for activities of general interest" (decree of January 6, 1989, concerning economic and financial terminology).

The Absence of Direct Compensation: A Foundational Principle of Sponsorship

Sponsorship allows a company to make a donation in cash, in-kind, or through services, to an organization of public interest without expecting equivalent compensation in return. Indeed, sponsorship allows for some return but requires a "marked disproportion" between the amount given and the value of the service provided. Additionally, these returns cannot directly impact the business activities of the sponsor.

Public Interest at the Heart of Sponsorship

The concept of public interest is the cornerstone of the system, as it helps determine who can benefit from sponsorship. The areas considered to be of public interest include:

"Works or organizations with philanthropic, educational, scientific, social, humanitarian, sports, family, or cultural purposes, or those contributing to the enhancement of artistic heritage, environmental protection, or the dissemination of French culture, language, and scientific knowledge" (Article 238 bis of the General Tax Code).

Among these works or organizations are foundations, associations, and public entities that meet the public interest criteria.

Tax Reduction for Sponsoring Companies

Article 238 bis of the General Tax Code provides a tax reduction, capped at €20,000 or 0.5% of the company's revenue, whichever is higher, for companies subject to income tax or corporate tax that have made donations to public interest works or organizations.

For all donations made under this article:

• The portion equal to or less than €2 million entitles the company to a 60% tax reduction.
• The portion exceeding this amount entitles the company to a 40% tax reduction.

As an exception to the €2 million threshold, donations to non-profit organizations that help people in difficulty always entitle the company to a 60% tax reduction. To learn more about eligible organizations: click here.

Tax Advantage Does Not Mean Tax Loophole

Why is sponsorship not a tax loophole? By encouraging sponsorship, the state has agreed to relinquish its monopoly on public interest and share the funding of the common good with private individuals (companies and individuals). Sponsorship is not a tax loophole for five key reasons:

1. It increases the resources of public interest actors, not those of the sponsors (sponsorship remains an expense for the company).
2. It saves the state money.
3. It greatly benefits the state and local communities.
4. Its impact generates economic activity.
5. It is a solution used by beneficiaries to compensate for the decrease in public funding.

SMEs and Microbusinesses: Admical's Efforts to Improve the Legal Framework

• Facilitating Sponsorship by SMEs/Microbusinesses

Before 2019, the 0.5% revenue cap was quickly reached by SMEs and microbusinesses, limiting their engagement. Admical had been proposing for several years to establish a €10,000 allowance for all amounts committed to sponsorship, beyond which the 0.5% cap would apply. This provision was adopted in 2019 and raised to €20,000 in 2020. Now, a company can benefit from a tax reduction for sponsorship up to €20,000 in donations, regardless of its revenue.