- Original Poster
- #1
Hi, hope everyone had a good xmas! 
We are a VAT registered company. We are looking to sponsor a couple of up and coming locals this year. I just want to find out how this works from a tax/vat point of view. I have heard of sponsorship deals getting "lost in the books" so to speak but is this strictly true?
Basically we would be either donating products to assist with the events or giving a financial contribution. We might also just offer a flat rate discount on anything they need throughout the year (deal still to be finalised) In exchange we would have our logo displayed by the sponsor at each event. How do each of the above scenarios impact on VAT? The way I see it is if we are donating products there is no money exchanged so no VAT to pay to the government. If we offer it at a discount then obviously there is some money changing hands so there would be VAT to pay.
The other question is what are the laws regarding selling at a loss. Instead of giving a complete free donation what if we sell at a discount but subsidise part of the cost so we are selling slightly below cost. What are the legalities of this?
Any accountants or business owners with previous experience of sponsoring care to offer some advice on this one as we need to get the deal finalised pretty quick, but until we know exactly whats involved from a tax point of view we cant really decide how to proceed.
Massive thanks in advance!
We are a VAT registered company. We are looking to sponsor a couple of up and coming locals this year. I just want to find out how this works from a tax/vat point of view. I have heard of sponsorship deals getting "lost in the books" so to speak but is this strictly true?
Basically we would be either donating products to assist with the events or giving a financial contribution. We might also just offer a flat rate discount on anything they need throughout the year (deal still to be finalised) In exchange we would have our logo displayed by the sponsor at each event. How do each of the above scenarios impact on VAT? The way I see it is if we are donating products there is no money exchanged so no VAT to pay to the government. If we offer it at a discount then obviously there is some money changing hands so there would be VAT to pay.
The other question is what are the laws regarding selling at a loss. Instead of giving a complete free donation what if we sell at a discount but subsidise part of the cost so we are selling slightly below cost. What are the legalities of this?
Any accountants or business owners with previous experience of sponsoring care to offer some advice on this one as we need to get the deal finalised pretty quick, but until we know exactly whats involved from a tax point of view we cant really decide how to proceed.
Massive thanks in advance!
