EXTENDED DEDUCTION RIGHT FOR SPONSORSHIP EXPENSES

There is currently no express statutory rule on the deductibility of sponsorship expenses. Under case law (RÅ 2000 ref. 31), deduction requires that the sponsor receives consideration of corresponding value or that there is a sufficiently strong connection between the sponsorship and the sponsor’s business. Goodwill effects alone have not been sufficient, and the position has long been regarded as restrictive.

It is now proposed that an express rule be introduced in the Swedish Income Tax Act (1999:1229) under which expenses incurred to improve or maintain the reputation of the business shall be deductible, expressly carved out from the prohibition on deducting gifts. The company must make probable that the expenses aim at improving or maintaining the business's reputation, but no concrete effect need be shown — long-term and indirect effects such as strengthened competitiveness, brand value and an improved ability to attract customers, capital and labour are included. The sponsorship must, however, be conveyed outwards in a way that can reach the relevant target group. Expenses for representation, political activities and religious activities are excluded.

The proposed amendments are set to come into effect on 1 January 2027, with a bill expected to be presented to the Swedish Parliament during the autumn of 2026 (but will depend on final outcome of the Swedish general election and the new government).