Sponsorship and donations play a crucial role in charitable activities. Both allow companies and individuals to support charitable causes, but there are clear differences between the two concepts. In this blog post, we take a closer look at sponsorship and donations and their tax implications in Switzerland.
Sponsorship - more than just financial support
Sponsorship is a form of support in which an organisation or individual provides funding, services or resources to promote an event, organisation or initiative. In return, the sponsor usually receives something in return, such as advertising, brand exposure or other benefits. Sponsorship is often used as a marketing strategy to strengthen one's own brand and at the same time make a positive contribution to society.
In Switzerland, sponsorship expenses are generally treated by companies as business expenses and can therefore be deducted for tax purposes. However, this requires that the sponsorship is business-related and has a clear connection to the company.
Donations - altruistic financial contribution
In contrast to this is the donation, which is primarily an altruistic financial contribution. Donations are given without the expectation of a direct consideration and serve the purpose of supporting charitable organisations or projects. However, donors can claim tax benefits, depending on the tax laws of their country.
Donations are tax-deductible in Switzerland, but are subject to certain conditions. To be recognised for tax purposes, the donation must be made to an organisation recognised as charitable. The benefits must reach CHF 100 in the tax year and not exceed a total of 20 per cent of the income reduced by the expenses. The organisation must provide appropriate evidence of the use of funds and its charitable status. Donors can then claim their donations in their tax return and benefit from tax advantages.
