Section 39-1-7 of the CGI provides that the expenditure incurred by undertakings in connection with events of a cultural character or contributing to the development of the artistic heritage or the dissemination of French culture, language and scientific knowledge, are deductible from the taxable income of the business when incurred in the direct interest of the business.

Definition of sponsorship expenses

Expenses incurred in sponsorship operations are intended to promote the company’s brand image.

The sponsorship therefore responds to an explicitly calculated and reasoned commercial approach, its impact must be quantifiable and proportionate to the initial investment.

Conditions for deduction

Sponsorship expenses are deductible from the taxable results of the undertaking which incurs them when they are incurred in the direct interest of the holding.

This condition is considered fulfilled when:

• the identification of the company that intends to promote its brand image is ensured regardless of the medium used (posters, press announcements, media effects, etc.);
• the expenses incurred are related to the benefit expected by the company. The latter must be able to justify that the costs incurred in a sponsorship action are not excessive in view of the size of the expected consideration.

Expenses incurred must meet the general conditions of expenses in the same way as other overhead expenses.

Due to its commercial character, the sponsorship expenditure must be invoiced subject to VAT.