Country Focus: France
The CNC puts tax credits under the microscope
by Fabien Lemercier
- Cinema, audiovisual, international and video-game tax credits: these four tax measures have been the subject of a thorough analysis led by the CNC, which has also published an enlightening study comparing them to the equivalent mechanisms used in other European countries (Belgium, Luxembourg, Germany, Ireland, Hungary and the United Kingdom), as well as Canada.
The cinema tax credit has been of benefit to around half of the French-initiative films produced since 2004, representing 7.8% of the total cost of these works. Standing at a total of €42.2 million in 2013, it allowed more shoots to be brought onto French soil, which had a positive impact on employment and the variety found in film production. But this measure also boosts the state coffers, with an estimated revenue of €129 million generated last year from the €491 million of expenditure in France by the works that received the cinema tax credit. For each euro of cinema tax credit paid out, €11.60 was spent across the industry and €3.10 in tax and social-security revenues was collected by the state.
The assessment is just as favourable when it comes to the international tax credit, with expenditure in France on the rise (€110 million last year) for the works that received it, and state revenue estimated at €41.4 million in 2013 for the €15.6 million in tax credits granted. The mechanism has had particularly favourable consequences for the activities of French technical industries, the reputation of animation and special-effects companies, and France’s ability to attract tourists from all over the world.
Lastly, the CNC has published a study comparing the tax incentive systems for film, audiovisual and video-game production in Europe (Belgium, Luxembourg, Germany, Ireland, Hungary and the UK), as well as Canada. This analysis of the huge variety of measures, which employ very diverse methods, shows the French tax credit to be less attractive than its “competitors” if judged on purely financial criteria (the ceiling and eligible expenditure) and demonstrates that it is also virtually incompatible with the other measures (apart from the Belgian tax shelter and the Canadian tax credits). In 2013, the French tax credit only represented 7.9% of the production cost of approved French-initiative films, as against 11.4% for the Irish system, 12.2% for Germany, 18.9% for the Belgian tax shelter and 27% for Canada.
The studies (available in French only) can be downloaded from the CNC’s website: "Assessment of the tax-credit measures", "Comparative study of tax credits in Europe and Canada", "How do tax credits work?".