20% Profit Tax Redirection — A Guide for Companies

Every company pays profit tax. That's a fact. But few companies know that they can choose where a part of this money goes. Through the sponsorship mechanism, up to 20% of the profit tax can be directed to non-profit organizations — at no additional cost to the company.

At Prison Fellowship Romania Foundation, partner companies don't just donate money. They invest in programs that generate measurable results: a recidivism rate 3 times lower than the national average, 450+ warm meals daily, and 18,000+ supported children.

How does the 20% redirection work?

The sponsorship mechanism is regulated by the Fiscal Code (Article 25, Paragraph 4) and allows profit tax-paying companies to redirect up to 20% of their profit tax to non-profit entities or religious units.

What does this mean concretely?

If your company has an annual profit tax of 100,000 LEI, you can redirect up to 20,000 LEI to PFR. This money is deducted from the tax you would have paid to the state budget anyway.

It is not an additional expense. It is a reallocation of money that the company owes to the state.

Who can benefit?

·        Commercial companies paying profit tax (16%)

·        Micro-enterprises (with specific limitations)

·        Freelancers (PFA) and liberal professions (with income tax regime)

What are the limits?

The redirected amount cannot exceed:

·        20% of the owed profit tax

·        0.75% of the turnover (deductible sponsorship expense ceiling)

The lower of the two limits applies.

Step-by-step process

Step 1: Calculate the available amount

Discuss with your company's financial department or accountant. You need:

·        Estimated profit tax for the current year

·        Turnover (for verifying the 0.75% ceiling)

·        Sponsorships already made in the current year (if any)

Step 2: Conclude a sponsorship contract

Sponsorship is done based on a contract between the company and the beneficiary organization. PFR prepares the contract — all you need to do is contact the team at office@pfr.ro.

The contract specifies:

·        Sponsorship amount

·        Destination of funds (general or specific program)

·        Period covered

·        Obligations of the parties

Step 3: Make the payment

Transfer the amount to the PFR account specified in the contract. PFR issues a sponsorship certificate and all necessary documents for accounting records.

Step 4: Fiscal registration

The company's accountant registers the sponsorship as a tax deduction when calculating profit tax. In the annual declaration, the amount appears as a reduction of the owed tax.

The 3 pillars of PFR corporate partnership

Prison Fellowship Romania offers partner companies three ways to get involved:

1. Financial donations

Direct sponsorship from profit tax (20% mechanism) or additional donations. Funds support any of the 8 PFR programs, at the company's choice:

·        Kitchen of Hope: A 10,000 LEI sponsorship funds approximately 330 warm meals

·        Angels' Network: 5,000 LEI can provide packages for 100 children with parents in detention

·        Prison Programs: Funding a complete cycle of the Prisoner's Journey program in a penitentiary

2. In-kind donations

Companies can donate products, equipment, or services:

·        Food (producers, retailers, HoReCa)

·        IT equipment or office furniture

·        Construction materials (for the Inclusion Center or APAC project)

·        Pro-bono professional services (legal, accounting, IT)

PFR manages 381 tons of goods annually. International partner companies — Hoffnungstäger, Humedica, Human Bridge — regularly contribute with large shipments.

3. 20% Profit Tax Redirection

The most efficient fiscal mechanism: money reaches PFR at no additional cost to the company.

Why PFR?

Companies choosing to support Prison Fellowship Romania benefit from:

Full transparency

·        85% of each donation goes directly to beneficiaries

·        Independent annual external audit

·        Detailed public reports

·        Every leu documented and reported

Measurable impact

·        20,000+ vulnerable people supported annually

·        Recidivism rate of ~15% for program participants (compared to 40-50% national average)

·        450+ warm meals daily, 365 days a year

·        18,000+ children supported through the Angels' Network

Institutional credibility

·        30+ years of continuous activity (since 1993)

·        NGO of public utility, recognized by the Romanian Government

·        Official ANP (National Prison Administration) partner

·        Member of Prison Fellowship International (120+ countries, UN ECOSOC consultative status)

·        AJPIS accreditation as a provider of social services

CSR visibility

·        Mention in PFR communications and reports

·        Co-branding opportunities for events and campaigns

·        Visual materials and impactful stories for your own CSR communication

·        Corporate volunteering experiences (impactful team building)

Scale of impact for companies

Frequently Asked Questions

Is this the same as the 3.5% tax redirection?

No. These are different mechanisms. The 3.5% redirection applies to individuals (income tax, form 230). The 20% redirection applies to companies (profit tax, sponsorship agreement). Associates and shareholders can use both mechanisms simultaneously.

Can I choose the program I support?

Yes. The sponsorship agreement can specify the destination of funds: Kitchen of Hope, Angel Network, prison programs, Inclusion Center, or any other PFR program. Alternatively, the sponsorship can be general — PFR allocates funds where the need is greatest.

What documents do I receive?

PFR issues: sponsorship agreement, donation/sponsorship certificate, impact report (upon request), all necessary documents for accounting records and tax deduction.

Is there a minimum sponsorship amount?

There is no legal minimum. PFR appreciates any contribution.

Can I organize a collection campaign for employees?

Absolutely. PFR can provide materials, logistical coordination, and volunteers for internal collection campaigns for goods or promotion of form 230 (3.5% for employees).

Turn tax into impact

Profit tax is an obligation. But how you choose to manage it can be a strategic decision. By redirecting 20% to PFR, your company loses nothing — but gains the opportunity to contribute to programs that have been transforming lives for over 30 years.

Prison Fellowship Romania Foundation is the trusted partner for companies that want more than profit — they want impact.