Industry Report: Financing
The French Credit d’Impôt and the Soficas
by Julio Talavera Milla
- The French Credit d’Impôt and the Soficas
Unlike other European countries, France has two different producer’s tax relief schemes for national and international productions (Credit d’Impôt and Credit d’Impôt International), which means that the money for national and foreign productions comes from different pots, securing a constant financing source for the domestic cinema production.
Any form of non-refundable public funds brought to the film by the producer will be proportionally deducted from the eligible costs prior to calculating the tax relief as follows:
Deduction of the eligible costs = (Eligible costs/Budget of the film) x Non-refundable public funds
Budget of the film: 4 million euros
Eligible costs: 2.7 million euros
National support: 250k euros
Local support: 50k euros
Deduction = (2,7/4) x (250,000 + 50,000) = 202,500 euros
Tax relief = 0,2 x (2,700,000 – 202,500) = 499,500 euros
Neither scheme is automatic, which means that before incurring any expense, the producer has to apply for approval of the tax discount to the CNC, which will issue a certificate for the French Treasury. The write-off of taxes will happen at the end of the fiscal year; should the tax liability of the production company be less than the approved credit d’impôt, the Treasury will refund the producers the difference.
In addition to these two measures, a tax shelter for investors in film and television projects is also available. In this case the money is managed by the so called
Under the condition of keeping their money in the fund for at least five years, investors are entitled to an income tax deduction equal to 36% of their investment (43% if the Sofica invests at least 10% of the money raised over the year in independent production companies). In either case, the taxable income can be reduced by no more than 25% or 18k euros, whichever is lower, which makes possible a tax deduction of up to 6,480 euros and 7,740 euros a year respectively.
As Soficas are market-oriented companies seeking profit, they usually provide expensive money in the form of gap financing (usually below 10% of the total budget), standing only behind the distributor within the recoupment schedule in most of the cases. Even if they are allowed to invest in both movie and TV productions, most of them are only devoted to feature films. Each of them can invest 20% of its money in foreign-speaking co-productions, as long as the language of the film matches the foreign co-producer’s country language. Only a small part of the Soficas’ money is invested in independent productions.
Every year CNC gives approval to several of these societies to operate under the conditions explained above. Click here to check the list for 2012.
Read also: the Belgian tax shelter.