“If we support the local sports club with CZK 100,000, will the state give us CZK 21,000 back as a tax saving?” Yes — exactly that, provided the contract is drafted correctly and the benefit has the character of advertising. Sponsorship is not a donation. It is a commercial relationship that creates a tax-deductible expense for the company. Here is an overview anyone can understand. No legalese, just clear numbers, examples and warnings about common mistakes.
Basic rule: Sponsorship is advertising, not a donation
The first and most important point: sponsorship is not the same as a donation. A donation is a gratuitous transfer (you expect nothing in return); sponsorship is a form of advertising. A sponsoring company wants to promote its name, logo or product. That is precisely why — unlike a donation — sponsorship costs can be claimed as a tax-deductible expense. Sponsorship does not count toward the donation deduction limit and does not compete with other donations.
Sponsorship is more tax-advantageous than a donation. While a donation can only be deducted from the tax base up to a certain limit (for 2025–2026 up to 30% of the tax base), sponsorship is recorded in accounting as an expense — that is, a cost that reduces the tax base in full and without a percentage limit. All that is required is a properly drafted contract and proof that the benefit had an advertising character.
What does the law say? No special clause, but clear rules
Expenses for advertising and sponsorship are not listed as special items in the Income Tax Act. That does not mean they are non-deductible. On the contrary — they are governed by the general provision § 24(1) of the Income Tax Act (ZDP), which says that a tax-deductible expense is any expense incurred to achieve, secure and maintain taxable income. Sponsorship meets that condition: the company receives advertising and promotion intended to increase its revenue.
It is important that sponsorship is defined by advertising regulation as a form of advertising, specifically as “a contribution provided with the aim of supporting the production or sale of goods, provision of services or other performance of the sponsor.” For tax purposes, it is therefore treated the same way as advertising expenses.
Example: A company sponsors youth sport CZK 100,000 — how much does it save?
The company has a tax base of CZK 2,000,000. It signs a contract with a sports club that clearly states that for the CZK 100,000 payment it will receive placement of its logo on children’s jerseys and on the club’s website. The contract is therefore sponsorship, not a donation. The CZK 100,000 is booked as an expense (account 518 — Other services).
The corporate income tax rate was increased from 19% to 21% as of 2024 (and remains 21% for 2025 and 2026).
Tax originally (without sponsorship): 2,000,000 × 21% = CZK 420,000.
After accounting sponsorship as an expense: (2,000,000 − 100,000) × 21% = CZK 399,000.
Tax saving: 420,000 − 399,000 = CZK 21,000.
The company therefore effectively pays CZK 79,000 net, supports the sports centre with CZK 100,000 and gains goodwill in the public eye. Compared to a donation, this is more advantageous — a donation of the same amount could only be deducted up to the limit (30% of the tax base for the temporary period until the end of 2026) as a deduction from the tax base, not as a full expense. Sponsorship goes into expenses in full.
Summary table — tax benefits at a glance
| Feature | Sponsorship | Donation |
|---|---|---|
| Legal nature | Commercial relationship (advertising) | Gratuitous transfer |
| Accounting treatment | Expense (account 518) — reduces tax base | Deduction from tax base (max. 30% of tax base until 2026) |
| Percentage limit | None — recorded as a full expense | Temporarily increased limit of 30% of the tax base (until end of 2026; from 2027 a return to 15%) |
| Need for a contract | Yes, clearly defining the advertising deliverables | Yes, donation agreement or confirmation |
| Who benefits more | Companies aiming to maximize tax savings | Companies and individuals who do not want a quid pro quo |
Common myths and mistakes (watch out — tax authorities check these!)
❌ “Sponsorship gift” — a term that does not exist
If you call the contract a “sponsorship gift,” the tax authority may challenge it. Sponsorship is not a donation. If the transfer is without consideration, it is a donation. If the company receives advertising in return, it is sponsorship. Do not use these terms loosely — it can cost you the tax deductibility.
❌ Simply listing a name is not enough — it must promote goods or services
Merely publishing the sponsor’s trade name on a website or in a programme is not necessarily considered a consideration, unless it is connected to the promotion of specific goods or services. It will only qualify as a tax-deductible expense if the sponsorship is linked to promotion of the brand or product that can increase revenue.
❌ Missing proof
Tax authorities pay close attention to advertising and sponsorship expenses. If you cannot prove that the advertising actually took place (photos, screenshots, witness statements), the authority may disallow the expense.
❌ Unpaid expenses
If the sponsorship contribution was not actually paid (for example, set off without real cash flow), you cannot claim it as a tax expense. The money must genuinely leave your account (or be transferred to the recipient’s account).
What you need to prove sponsorship as a tax-deductible expense
- 📝 Contract — it must clearly define what the sponsor receives for the payment (logo placement, website advertising, mention at an event, priority tickets, etc.).
- 🧾 Invoice — a standard accounting document proving the transaction occurred.
- 📸 Proof of delivery — photos of the logo on jerseys, website screenshots, event programmes or witness statements. The more evidence, the better.
- 💸 Proof of payment — bank statement or cash receipt.
What about individuals and sole traders?
The same principle applies to sole traders (OSVČ): if an expense for advertising or sponsorship meets the condition of being incurred to achieve, secure and maintain taxable income, it is deductible directly in the tax return. Sponsorship therefore reduces not only income tax but also, indirectly, the base for social and health insurance contributions, making it an effective support tool for self-employed people.
