Sponsorship agreements – consideration, exposure, tax and key contractual terms

Short answer: A sponsorship agreement should describe exactly what the sponsor is paying for and what counter-prestations the recipient must deliver. The Swedish Tax Agency assesses the right to a tax deduction based on the actual content and market value of the counter-prestations – not just on the fact that the payment is called sponsorship.

What is sponsorship?

Sponsorship can consist of money, products, or services in exchange for things like exposure, advertising space, the right to use a name or logo, tickets, event participation, or other commercial counter-prestations.

Describe the counter-prestations concretely

Avoid wording that only mentions "exposure" or "marketing." Instead, specify, for example, the number of publications, signage placement, digital reach, logo format, events, tickets, the right to use images, and the duration of the exposure.

Tax deductibility

The Swedish Tax Agency states that there is no specific general rule for the deductibility of sponsorship. Deductions are assessed according to standard rules and are primarily granted for the value of direct counter-prestations or, in some cases, other expenses with a sufficient connection to the business. A sponsorship package therefore often needs to be broken down and valued.

Gift or sponsorship?

If the payment lacks a relevant counter-prestation, it can be considered a gift, in whole or in part, which may affect the right to a tax deduction. A detailed written agreement helps the company demonstrate what the payment actually covers.

What should the sponsorship agreement include?

• parties and purpose
• sponsorship compensation and payment schedule
• concrete counter-prestations and market values
• logo, brand, and intellectual property rights
• exclusivity and competing sponsors
• social media and content rights
• agreement term, event dates, and reporting
• cancelled events and force majeure
• termination and breach of contract

Brand and content

If the sponsor is granted the right to use the association’s, athlete’s, or event’s name and images, the scope, channels, and time period should be regulated. The same applies when the recipient is to use the sponsor’s brand.

Common mistakes

• counter-prestations are described too generally
• the value of different parts of the sponsorship package is not documented
• the right to images and logos is missing
• there is no plan if the event is cancelled
• exclusivity is stated without defining the competitor category

See the Template Store's sponsorship agreement template.

FAQ

Is all sponsorship tax-deductible?

No. The tax assessment depends on factors such as the counter-prestation, market value, and connection to the business.

Does the sponsorship agreement need to be in writing?

A written agreement is strongly recommended, among other things, to be able to demonstrate which counter-prestations have been agreed upon.

Should VAT be charged?

The VAT issue depends on what goods or services are actually provided and the VAT status of the parties. Assess each arrangement based on the actual counter-prestation.

This article provides general information and does not replace legal, tax, or accounting advice.