Turkey Issues New Guidance on Sports Sponsorship Tax Treatment

Turkey's Revenue Administration has published comprehensive guidance on the taxation of sponsorship expenditures, providing much-needed clarity for businesses engaging in sports-related sponsorships. The Guide to the Taxation of Sponsorship Expenditures, announced on August 27, 2025, establishes clear rules for deductibility rates and VAT treatment, marking a significant development for corporate tax planning in Turkey.

Key Deductibility Rules

The guide introduces a two-tier deductibility structure based on the type of sports activity being sponsored:

Amateur Sports: 100% deductible for both corporate and individual income tax purposes
Professional Sports: 50% deductible for both corporate and individual income tax purposes

This differentiation recognizes the varying commercial benefits associated with different levels of sports sponsorship, with amateur sports receiving more favorable tax treatment due to their primarily social purpose.

Eligible Sponsorship Expenditures

The guidance provides specific examples of qualifying sponsorship costs:

• Sports facility rental expenses

• Travel, accommodation, and food costs for athletes

• Sports equipment purchases

• In-kind and cash expenditures for sports facilities

• Performance bonus payments to athletes based on competition results

These expenditures must be properly documented and separately stated in annual tax declarations to qualify for the specified deduction rates.

Critical Distinction: Sponsorship vs. Advertising

The guide establishes an important differentiation between sponsorship and advertising expenditures, each receiving distinct tax treatment:

Sponsorship expenditures are primarily social in purpose, providing indirect commercial benefits through communication opportunities. They aim to fulfill social responsibilities rather than directly promote commercial interests.

Advertising expenditures provide direct commercial benefits and focus on company promotion through emblems, brands, names, and signage placement on sports fields, athlete clothing, or electronic displays.

While sponsorship follows the tiered deductibility structure, advertising expenditures remain fully deductible under general tax rules, provided they directly relate to acquiring and maintaining commercial income.

VAT Treatment Implications

The VAT treatment varies significantly between sponsorship and advertising:

Advertising: Always subject to VAT regardless of circumstances

Sponsorship: Variable VAT treatment depending on the arrangement:

• Supplies to public institutions and organizations provided free of charge are VAT exempt

• Other sponsorship-related supplies are generally subject to VAT

• Cash sponsorships typically fall outside VAT scope and remain exempt

Business Impact and Compliance

Companies engaging in sports sponsorship should immediately review their arrangements to determine proper classification and ensure compliance with the new guidelines. The distinction between sponsorship and advertising will require careful analysis of existing agreements to optimize tax benefits while maintaining proper documentation.

Organizations should also ensure their sponsorship agreements clearly define parties, purpose, scope, duration, rights, and obligations to support proper tax treatment. Additionally, proportional stamp duty applies to sponsorship agreements, adding another compliance consideration for businesses.

The guidance represents Turkey's effort to provide clearer tax rules for an increasingly important area of corporate social responsibility and marketing expenditure, offering businesses greater certainty in their tax planning strategies.