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Irish film scheme revisions to incentivise investment

The Irish Finance Act 2013 (the “Act”) has altered and extended the film relief scheme until 31 December 2020, subject to EU approval. The film relief scheme has been very successful in the past in achieving its goals of encouraging investment in Irish made film and television productions, creating jobs and promoting economic growth. Taxand Ireland explores these changes and their impact on investments into this industry and the economy in general.

The Act envisages the phasing out of the current investor-focused film relief scheme, with the introduction of a new system for granting relief to the film production companies from 1 January 2016 onwards. The new relief will be granted in the form of tax credit relief, which the production companies may offset against their corporate tax bill. 

The introduction of the new film relief scheme is a result of a comprehensive review of the current scheme by the Irish Department of Finance. The review found that the majority of other countries operating successful film relief schemes applied the grant to the film production companies as opposed to the individual investors. Focusing on the film production companies also has the advantage of preventing wealthy individuals from using the scheme to shelter their income. Further, it reduces the overall cost to the taxpayer while maximising the efficiency and benefit of the scheme to the film sector and economy in general.

The new scheme will shift the focus of the relief away from the individual investor to the production companies, and will allow a qualifying film production company to claim a 32% tax credit. The 32% will be measured against the lesser of the following:

  • Eligible expenditures (as certified by Irish Revenue)
  • 80% of the total production costs, or
  • EUR 50 million

The definition of a qualifying company will remain unchanged under the new scheme. However, an important development under the new scheme is the introduction of an additional “producer company”. The producer company will hold the shares in the qualifying film production company that will actually make and distribute the qualifying film. In addition, the producer company will be the one obligated to obtain approval for the scheme from the Irish Revenue.

In order to be a producer company by the new legislation’s definition, the company must be resident in Ireland or another EEA country, and be conducting a trade in producing films for public viewing on a commercial basis. The qualifying producer company cannot be a broadcaster or a company connected to a broadcaster.

In order to avail of the scheme, a certificate of approval must be requested by the producer company and issued by the Irish Revenue. A certificate will be granted to films which are expected to make a contribution to the Irish film industry and / or the promotion of Irish culture in general. 

Your Taxand contact for further queries is:
Martin Phelan
T. +353 1 639 5139

Conor Bradbury
T: +353 1 639 5214

Taxand's Take

This shift in focus of the film relief scheme from private investors to the film production companies should incentivise foreign film production companies to establish operations in Ireland. In turn, this should have positive consequences for both the Irish film industry and the economy in general by enhancing and developing Ireland as a competitive location for the production of film and television programs.

Although the new scheme may impact the film production companies’ cash flow, they will benefit from the 32% film tax credit which can be written off against their tax bill, with any excess funds being payable directly to them.  However, the details regarding the timing of the payment of the tax credit (amongst others) remain unclear. In the interim, it will be interesting to see whether the film production companies view the amended Irish film relief scheme as an incentive to establish operations in Ireland. 

Taxand's Take Author

Martin Phelan
Taxand Board member

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