Country Focus: Belgium
The Belgian tax shelter
by Julio Talavera Milla
- The Belgian tax shelter was introduced in 2002 in application of article 194 of the Belgian Income Tax Code. It is managed by the Belgian Ministry of Finance and allows Belgian registered companies investing in the production of European audiovisual works to benefit from a deduction of their taxable income worth 150% of the amount invested, up to 50% of their tax liabilities or 750k euro per year.
Investor’s taxable income: 1850k euros
Invested amount in a film project: 600k euros
Corporate income tax in Belgium: 33.99%
Taxable income deduction: 150% of the invested amount
Investor’s tax liability: 628.81k euros
Investor’s tax exempt income: 900k euros
Tax deduction: 305,910 euros
The investor does not necessarily need to be a Belgian company but at least needs to be a branch of a foreign company in the country; in other words, an eligible company is registered and pays corporate tax in Belgium. Film production companies and television broadcasters, in which production of audiovisual works is at the core of their business, as well as credit institutions cannot qualify as investors. The logic behind this restriction is that the mechanism was set up to bring new monies to the industry by getting new actors involved, not to give the industry a new direct subsidy.
Either the Flemish, French or German community has to label the project as “European work” according to the Television without Frontiers directive. At least 60% of the amount contributed by the tax shelter beneficiary must be a direct investment in rights’ acquisition (equity), whereas up to 40% of the money can be granted as a recoupable loan. The total investment cannot exceed 50% of the overall production’s budget.
As for the producer, it has to be a company devoted to audiovisual production based in Belgium. Broadcasters and companies linked to them are excluded of this scheme. An amount equal to at least 150% of the equity (not the repayable loan) reached thanks to this mechanism has to be spent in Belgium within a timeframe of 18 months after the signature of the framework agreement; that’s to say that a regional effect (minimum mandatory investment in the region) of 150% of the tax-related equity applies.
Invested amount: 600k euros, of which:
360k euros are direct investment (equity)
240k euros are a repayable loan.
At least 540k euros (150% of 360k euro) have to be spent in Belgium
In conclusion, the investor will pay 322,9k euro (instead of 628,81 euros) in taxes and the production company will get 600k euro to finance the film. However the investor is only risking 360k euro, since the remaining 240k euro will have to be repaid to him by the producer.
The qualifying audiovisual works are films and documentaries of any length intended for the big screen, as well as documentaries, animated series for television and TV-movies. There is no limit as to the number of companies participating in a production and, therefore, benefiting from the scheme, as long as both the production company and all investors fulfill the requirements.
Read also: the French credit d'impôt and the Soficas.