The sponsorship agreement is an innominate
agreement, which is not expressly regulated under
the Civil Code. It is concluded under the principle
of freedom of contract, that is the contracting
parties can structure the legal relationship between
them as they choose, unless the substance or
purpose run counter to the nature of such
relationship, statute, or principles of community
rights. The principal features of the sponsorship
agreement include consensuality, consideration,
and mutuality.
The sponsorship agreement regulates the provision
of funds to the sponsee in exchange for its
rendering of specified advertising and promotional
services. The origins of the sponsorship agreement
are in an attempt of undertakings to find new
alternative channels for promoting their businesses.
A definite advantage of concluding sponsorship
agreements is the ability to reach new groups of
customers, frequently those which are very closely
associated with the sponsee, thus making the right
choice of the sponsored person is essential. It
appears that the best solution for an undertaking is
to conclude the agreement with an individual
whose activity is closely linked with the type of the
undertaking’s business. However, if no such linkage
is available, conclusion of the sponsorship
agreement may offer the advantage of reaching
new markets, and as a result of attracting new
customers and under the worst-case scenario of
learning how the relevant group of customers
responds to the products or services offered by the
undertaking. One should, however, make sure that
the advertising activities target a potentially
unlimited addressee. Otherwise, there is the risk of
the advertising efforts being in vain, as they focus
on entities which cannot become the buyers of the
services or goods being promoted.
From the undertaking’s point of view, what is
important is not only the acquisition of promotional services but also the ability to deduct the related
advertising expenditures as revenue costs. It is
commonly accepted that the purpose of
expenditures of this type is to drive the demand for
the relevant goods or services offered by the
undertaking or for the brands being promoted by
persuading the largest possible number of
prospective customers to purchase goods and
services from the relevant company.
In accordance with the general rule as stated under
Article 22(1) of the Personal Income Tax of 26 July
1991 and Article 15(1) of the Corporate Income Tax,
revenue costs comprise costs incurred in order to
generate revenues or maintain or secure a source of
revenues (with certain exceptions which, however,
do not relate to advertising and promotion). It must
be borne in mind that when deducting sponsoring
expenditures, these need to be properly
substantiated. To avoid such expenditures being
rejected as sham, in addition to a VAT invoice it
may be worthwhile to make sure that additional
documentation demonstrating actual provision of
the services is available. Such documentation can
include for example photographic documentation,
video materials, press articles on the promotional
events, etc., in other words everything that can
serve as evidence of the agreement being an actual
one. It is also important that there is equivalence
between the performances of the parties to the
agreement, i.e. that the consideration in money
corresponds with the extent of performance under
the sponsorship agreement, as only then services
are purchased against consideration and, what
follows, the related expenditures can be recognised
as revenue costs. In the event of non-equivalence
between the consideration and the services
rendered, it may happen that the part of the fee
deemed to be over and above the actual value of
the services rendered is recognised as a donation,
and thus not deductible as a revenue cost.
MILLER, CANFIELD,
W. BABICKI, A. CHEŁCHOWSKI I WSPÓLNICY SP.K.
ul. Batorego 28-32
81-366 Gdynia
Tel. +48 58 782-0050
Fax +48 58 782-0060
gdynia@pl.millercanfield.com
ul. Nowogrodzka 11
00-513 Warszawa
Tel. +48 22 447-4300
Fax +48 22 447-4301
warszawa@pl.millercanfield.com
ul. Skarbowców 23a
53-125 Wrocław
Tel. +48 71 780-3100
Fax +48 71 780-3101
wroclaw@pl.millercanfield.com
Disclaimer: This publication has been prepared for clients and professional associates of Miller Canfield. It is intended to provide only a summary
of certain recent legal developments of selected areas of law. For this reason the information contained in this publication should not form the
basis of any decision as to a particular course of action; nor should it be relied on as legal advice or regarded as a substitute for detailed advice in
individual cases. The services of a competent professional adviser should be obtained in each instance so that the applicability of the relevant
legislation or other legal development to the particular facts can be verified.