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An overview by Nagashima Ohno & Tsunematsu, Taxand Japan
Sponsorship agreements are a key marketing strategy for companies seeking brand recognition through athlete endorsements. However, these agreements involve complex tax implications, particularly when dealing with non-resident athletes.
The taxation of sponsorship fees depends on the agreement’s structure and the athlete’s residency. If an athlete wears branded uniforms or appears in advertisements in Japan, the fees may be subject to Japanese income tax, with a 20.42% withholding requirement. Additionally, consumption tax applies if the service is performed domestically. Corporate sponsors can typically deduct these fees as advertising expenses.
Tsutomu Endo from our Japanese member firm Nagashima Ohno & Tsunematsu, has authored a newsletter analysing these issues, which you can read in more detail here.
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