NEWS

Steady improvement seen in the 1990s dashed by 1997 tax law

The first steps toward sponsorship in Greece were made with a great deal of optimism. A group of representatives from the world of the arts and letters and from the business world came together and established OMEPO, the Association for Business Support of the Arts, in 1986. The numbers show that in its first 12 years of operation, it had exceptionally good results. From the handful of millions of drachmas that were endowed to the arts in 1989, the figure reached 2 billion drachmas (about 6 million euros) in 1991 and 7 billion (about 20.5 million euros) in 1997 thanks to the positive climate that had been created, mostly through the association’s efforts. Marlena Georgiadou, one of the founding members who also served as secretary-general and president of OMEPO, notes: «OMEPO established the institution of sponsor awards and regularly organized specialized seminars around Greece to raise awareness concerning sponsorship of the arts both in local cultural communities and in the business world. We traveled all around the country and fought to make our opinion, that sponsorship is a reliable, two-way exchange that benefits all parties, heard.» According to Georgiadou, the rise in sponsorships, which had reached the billions-of-drachmas mark, whetted the appetite of the Ministry of Culture. In 1997, then-minister Evangelos Venizelos amended the legal framework for sponsorships by introducing several changes to the law pertaining to taxation. He imposed a 20 percent levy on all sponsorships, from private or state bodies, that exceeded 100,000 drachmas (just under 300 euros). This tax concerned all private and state bodies receiving funding. With this move, the ministry was hoping that a part of the funding provided by companies would end up in its own coffers, in a special fund which would at a later date help the ministry finance cultural organizations it had selected itself. The plan, however, proved a complete failure. «The amendment of the law put a complete freeze on the good climate that had been built so painstakingly and made the business world feel that the ministry’s stance was hostile. Basically, 20 percent was lost from each sponsorship, and this was a substantial burden on those receiving the funds,» explains OMEPO’s former communications adviser, Thalis Koutoupis. «Venizelos’s law created a huge counterincentive. It is therefore not surprising that from 7 billion drachmas’ worth of sponsorships in 1997, we saw the figure falling back to just a few hundred million in 1998. That same year OMEPO suspended its operations, closing down definitively in 2000.» The law today At the end of 2000, the law was changed yet again. The tax levy was reduced to 10 percent and applied to sponsorships of 1 million drachmas or more (about 3,000 euros), while the levy no longer concerned state bodies. In 2004, taxation on sponsorships was abolished completely, with the exception of some particular funds that went to sports associations. Koutoupis sees several problems in the legal framework of sponsorships that is in effect today. «In cases where sponsorship is not directed at a state-run body, the sponsor is obliged, by Law 1884/90, to select the recipient from among a small number of private institutions that have been selected – almost at random – as eligible for sponsorship by whichever ministers of culture and finance are in power, because only then is the tax deductible. The recipients of sponsorship, in turn, will cash in the funds after two or three months, a period of time that often has a catalytic effect on whether a project can go ahead or not. Finally, sponsors do not have the right to deduct from their gross income more than 15 percent.»