Response to interpellation 2023/24:348 on the right of deduction for sponsorship
Translated from Swedish by AI; the translation may contain errors. The Swedish text is the original.
Summary AI, written in advance
The debate concerns whether current tax rules for sponsorship counteract equal sports. M believes that the rules are neutral and that the market value for women's sports increases in line with its popularity 1. M argues that the legislation should remain neutral and that separate legislation could make the system more complicated 2 3. S, on the other hand, argues that case law means that companies wishing to sponsor equal sports do not receive the same deduction rights as for sponsorship to men and women 4. S believes that the Swedish Tax Agency's models value equal sponsorship lower than companies do, which cements inequality 4 5. S wants the investigation to include sponsorship to avoid gifts becoming more advantageous than equal sponsorship 5.
Written by AI in advance and may contain errors. The numbers lead to the speech a statement builds on; check against the text below.
Finansministern Elisabeth Svantesson (M)
Madam Speaker! Mathias Tegnér has asked me if I perceive that tax rules that counteract equal sponsorship are problematic and if, in that case, I intend to take measures to review the rules for sponsorship.
The Government considers that a more equal sports environment is an important issue. It is very pleasing that interest in, among other things, women's football is increasing and that so many of us followed the football World Cup this summer. The rules regarding deductions for sponsorship are neutral from an equality perspective and do not in themselves disadvantage women's sports. Historically, however, it has been the case that the lower interest in women's sports has meant that the consideration provided to sponsors has been considered to have a lower market value. It is therefore very pleasing that women's sports attract a larger audience and grow in popularity because it not only makes it more attractive for companies to sponsor equality but also means that the market value and the right to tax deductions for such sponsorship increase.
With that said, we politicians can and should, of course, also do what we can to make sports more equal. In 2022, the Riksdag issued a notice to review the regulatory framework for sponsorship to ensure equal sponsorship and to create a sustainable regulatory framework. The issue will be analyzed, and the government will report back on the matter.
Expenses for gifts and expenses for sponsorship are treated differently in the Income Tax Act. A company's expenses for gifts may never be deducted. A company's expenses for sponsorship shall, in comparison, be examined according to the main rule in the Income Tax Act that deductions may be made for expenses to acquire and maintain income.
The investigation that the interpellator refers to was decided during the summer of 2023 and is to submit a proposal on a tax incentive for legal entities' donations to non-profit activities. The investigator shall, among other things, produce proposals on how a tax incentive for donations from legal entities should be designed. Since the tax rules for sponsorship differ from the tax rules for donations, it has not been deemed appropriate for the investigation to also cover issues regarding the right to deduction for sponsorship.
Mathias Tegnér (S)
Mr. Speaker! Thank you, Minister for Finance, for the answer! This interpellation is therefore about how sponsorship should be valued - a new debate, old questions, no evening reading.
We must not underestimate how complicated these questions actually are. I want to start by saying that, because if one goes wrong here, it actually opens the door to tax evasion, something that we have debated here earlier today. I therefore have respect for the fact that the questions are difficult.
It is fundamentally about the right to deduct sponsorship, so what do we know? We know that both sponsorship and marketing are absolutely crucial for many companies' brand building. Sponsorship has simply become an indispensable part of running businesses, just as sponsorship is also an indispensable part for many sports and cultural associations in order for them to be able to run their operations. We also know that sponsorship can be misvalued, even though the importance of sponsorship should not be underestimated.
What is unreasonable about today's system, today's regulatory framework and today's case law is that the tax rules as a whole counteract equal sponsorship. This is due to how one values the value of sponsorship. The uncertainty regarding the right to deduction is also likely to lead to lower levels of sponsorship to Swedish association life, which is also negative for the entire Swedish civil society.
What is sponsorship then? Fundamentally and in simplified terms, sponsorship is a financial contribution from a company to sports, culture, or some other public-benefit activity. From practice we know, just as the Minister for Finance said, that the cost of sponsorship must be in reasonable proportion to the value for it to be deductible. Fundamentally, this regulation is not strange or unreasonable; the problem is the case law that has emerged, because in practice it means that companies that want to sponsor equality cannot do so with a similar right to deduction when it comes to sponsorship for boys and girls, or at least for men and women.
Before this interpellation debate, I also submitted a written question to the Minister for Finance. I included part of the answer I received to the question, because I was somewhat surprised. I perceive that the Minister for Finance, or perhaps some official in the Minister for Finance's vicinity, has not quite grasped the problem. I am sure that the Minister for Finance understands the problem, but I perceive that it is a problem if one does not see this problem at the Ministry of Finance as a whole.
The problem is that the models used by the Swedish Tax Agency value equal-opportunity sponsorship lower than many companies on the market do, and then there is a bit of a conflict regarding what the market value is. Therefore, I am somewhat surprised when the Minister for Finance concludes that it is the Swedish Tax Agency's valuation of sponsorship that is the correct one, rather than many Swedish companies' valuation of equal-opportunity sponsorship.
Therefore, we come to the question that is the important one in this interpellation debate: Does the Minister for Finance not see these problems? And if the Minister for Finance does see them, what does the government intend to do?
Finansministern Elisabeth Svantesson (M)
Mr. Speaker! Thank you, Mathias Tegnér, for raising an issue that is naturally very important from many perspectives!
I do not have any definitive answers. I think, just like the interpellator, that this is a complicated issue. The Riksdag issued a notice to the government in 2022, and it is an issue that we in the new government are, of course, also working on now.
The question is not obvious. Is it the tax legislation that should be changed, or should we change other areas so that we can ensure sports become more equal in a different way? It is not certain that it is the tax system that should contain different types of special legislation and be more complicated if the problem actually concerns other parts of sports and other challenges that arise, for example, with inequality in sports as such.
For the government, equal sports are obviously important, and I know that has also been the case for previous governments. We allocated approximately 2 billion kronor in the budget to the sports movement, and in the guidelines we have for the state grants to sports, we are very clear that they shall be followed up from an equality perspective.
For example, the Swedish Sports Confederation (Riksidrottsförbundet) shall specifically report on how the grant recipients work to increase participation in sports activities for girls who are foreign-born. There is, therefore, a good deal of this in the budget, different formulations and follow-up of this. We also have a special initiative on sports in disadvantaged areas. However, there is much to be done both at the municipal and national level to truly ensure that sports become even more equal.
We are working on the issue, and I look forward to hearing more arguments from the interpellor because I think this is a challenge.
Fundamentally, the legislation should be neutral. Now I will change gears a bit, but it is as with the pension system. Women have lower pensions than men, but that is not due to the pension system itself, but rather because women, for various reasons, have worked less and earned less. Therefore, they receive a lower pension. But the pension system itself is neutral.
I look forward to hearing the arguments from the interpellor because I myself do not think it is a simple and clear path to have separate legislation to encourage what I also think is important, namely equal sports.
Mathias Tegnér (S)
Mr. Speaker! I thank the Minister for Finance for the answer.
I am glad that we agree that it is important to invest in sports. I will not turn this into a sports policy debate, but I think we should stick to the tax area – even though I personally perceive that the investment of 2 billion would have fit better within the RF system than a new privatized system. One can have different opinions on that, and that is not what today's debate should be about.
Fundamentally, the discussion is about how one views market value. It is not obvious how the problem should be solved, and it is also not obvious that separate legislation is the best solution. I agree with the Minister for Finance on that.
Fundamentally, it is about a problem in the legislation combined with case law. The problem concerns how market value is viewed. What is happening is that Skatteverket has a view on market value, and many companies on the market have a different view on market value. In practice, it is about many companies saying that if they are to sponsor that type of elite sports, they want to invest in both the men's team and the women's team. They normally do not do that because they are altruistic, but because it is a reasonable valuation of sponsorship and it is a reasonable valuation of how their marketing best achieves results.
The problem is that the Swedish Tax Agency's models do not base themselves on the existence of a value in equality, but rather on a value based on exactly how many individuals watch a broadcast or are present at an arena. The problem is then that the Swedish Tax Agency's models and our regulatory framework cement the inequality that exists within sports. Companies become spearheads in driving towards a more equal sport.
Then my perception is that the regulatory framework is incorrect. I am not sure that the solution is special legislation. I am actually not sure what the solution is, but I am completely sure that the regulatory framework as a whole is unreasonable. If one believes that the regulatory framework is unreasonable and produces unreasonable effects, one needs to look at different solutions.
Then we come to the question in the interpellation debate. I am aware that it concerns different paragraphs in the Income Tax Act, but fundamentally it is about gifts and sponsorship from legal entities that border on each other when it comes to a company's actions. Therefore, I wonder why the government chose not to investigate the issues together.
The risk is that when the government investigates only gifts and wants to create an incentive for gifts from legal entities, it will become more advantageous to give gifts from legal entities than to give equivalent sponsorship. That was not the legislator's intention when the decision on the Income Tax Act was made many years ago.
Finansministern Elisabeth Svantesson (M)
Mr. Speaker! I can agree that it is a complex issue, and it is not self-evident how it should be solved. The Riksdag has previously made a notification to the government to review the issue.
Then there was the question of the investigation that has been commissioned. It is a matter of two separate tax legislations, and in the name of avoiding complications, we should not complicate this any further. But things may emerge in the investigation that we can take advantage of.
I thank the member for raising this important issue. I also think it is important to broaden the question so that all of us who have political mandates in different positions – regions, municipalities, parliament or government – see that there is an inequality in the field of sports. We shall support girls' sports in the ways we can, and then we can see whether the legislative path or other paths are best. Just as I touched upon earlier, it is a challenge with separate legislation. Let us keep this as neutral and pure as possible and instead find ways to still support girls' and women's sports participation.
Mathias Tegnér (S)
Mr. Speaker! I thank the Minister for Finance for the answer.
It pleases me that we both intend to work for equal sports. I still maintain that there is a symbolic value and a monetary value in the problem that equal sports are actually counteracted by our total regulatory framework. Naturally, we shall find other ways to support women's and girls' sports, but there is a fundamental problem that our regulatory frameworks are actually not equal, that companies are forced to experience regulatory complications because they want to be equal.
I would still like to urge the Minister for Finance to look at the alternative regarding additional directives for the investigation. I agree with the Minister for Finance that we should not create complications for entrepreneurs and business operations, but today's rules are complicated. Companies point out that these rules are the most complicated. On the other hand, additional directives would not mean complications for entrepreneurs but only for a special investigator, and I think that is something we can accept. I have myself been a special investigator, and I am sure that more investigators are competent enough to handle two issues that are close to each other but are located in different parts of the Income Tax Act. A special investigator can handle complications, but on the other hand, our entrepreneurs in Sweden should not have to experience complications. They do with today's rules.
Finansministern Elisabeth Svantesson (M)
Mr. Speaker! I thank you for the debate.
Source: The Swedish Parliament. The speeches come from the open data of the Riksdag, translated into English by AI, which may contain errors.