Tax Incentives for Investments in Sports: Entrepreneurs Stand to Gain

Croatian sports may finally receive a systematic boost from the private sector. The Ministry of Finance has submitted amendments to the Corporate Income Tax Act for urgent procedure, including a provision that allows for tax relief for entrepreneurs who invest in sports through sponsorships.

This is a new addition to Article 6, under which sponsorship expenses given to sports organizations, whose activities are aimed at developing and promoting socially beneficial sports activities, are recognized as an additional deduction from the tax base. In practice, this means that entrepreneurs will achieve a tax incentive of 10 to 18 percent on the amount they pay for sports sponsorship, depending on the tax bracket they fall into.

According to the official explanation from the proposed law, the Minister of Sports and Tourism, Tonči Glavina, with the consent of the Minister of Finance, Marko Primorac, will determine which organizations meet the criteria for using this relief. This aims to prevent abuse of the provision and ensure that funds are directed exclusively to those sports entities that contribute to socially beneficial programs. The amendments are expected to come into effect by the end of the year. Glavina also announced a new measure.

– When we talk about advancements for sports solely in terms of tax regulations, in accordance with the provisions of the Corporate Income Tax Act, we are preparing a Decision that will, with the consent of the Government of the Republic of Croatia, allow that donations in kind or cash, including to sports clubs, up to 10 percent of the revenue generated in the previous or current tax period for purposes defined by the National Sports Program as a strategic document, are considered tax-deductible expenses. Until now, this percentage was two percent, and this Decision would come into effect on January 1, 2026 – said Glavina.

For the sports sector, this measure is of exceptional importance as it brings a model of sustainable financing in which a greater burden is taken on by private capital. Until now, clubs have mostly depended on public funds, but it is difficult to ensure business stability from the budgets of the central government and local self-government units. For this reason, entrepreneurs have often been reluctant to invest, considering sports clubs a reputational and financial risk.

Recently, a shift has been visible. The state has increased support for team sports through the Croatian Olympic Committee and national sports federations, while the City of Zagreb has significantly raised investments in clubs through the Sports Association and the city office for sports and youth. The new tax framework is expected to further strengthen the trust of the private sector and encourage long-term investments.

The importance of this measure extends beyond the sports community itself. The sports industry in Croatia employs tens of thousands of people and has significant effects on the national economy, tourism, and the promotion of the country. According to available data, more than 44 thousand people are directly employed in the sports industry, while another 22 thousand work indirectly through supply chains. In 2015 alone, sports in Croatia generated 1.39 billion euros in gross added value.

At the level of the European Union, sports are recognized as a significant economic sector. According to Eurostat data, in 2023, 1.6 million people were employed in the sports sector, of which as much as 37 percent were young people between the ages of 15 and 29. During the same period, more than five thousand sports equipment manufacturers achieved a total turnover of eight billion euros.

For Croatia, the amendments to the Corporate Income Tax Act represent a crucial step towards a stronger role for the private sector in sports, a more stable revenue structure for clubs, and the long-term sustainable development of the sports industry.