The impact of fiscal incentive schemes on European film and audiovisual production
- The European Audiovisual Observatory publishes a new report on the evolution and the effectiveness of fiscal incentives in reaching their goal
In France, for every €1 of fiscal incentive, €12.80 of investment in the sector and €3.50 of tax and social revenues are collected. In the UK, for every £1 of tax relief granted, £12 of additional GVA is generated by the sector. In Ireland, the net tax benefits of the fiscal incentive are €21.1 million. In Hungary, the model shows a net tax benefit of 24.2% with HUF58 million more paid in tax than granted in indirect subsidies. These are only four examples of the countries that publish benefits of the use of fiscal incentives – ie, tax shelters, rebates or tax credits – to stimulate greater levels of production in the film and audiovisual industries, which has become a popular policy tool in Europe and worldwide in recent years. The European Audiovisual Observatory has presented, alongside Olsberg•SPI, its latest report on the topic, The Impact of Fiscal Incentive Schemes on the Production of Film and Audiovisual Works in Europe.
Between 2010 and 2014, European countries introduced 12 new fiscal incentives to support film, television and video-game production, bringing the total to 26 fiscal incentive schemes operated in 17 European countries as of 31 December 2014. Among the newly introduced schemes, there is a distinct preference for rebate-style structures over the more traditional tax shelter. Of the seven entirely new, permanent incentive systems for film production introduced in Europe between 2010 and 2014, six were structured as rebates, with only one taking the form of a tax shelter. In conjunction with the addition of new structures, there is also a trend towards more frequent adaptation and updating of existing systems. In the UK, the incentives have been expanded to new sectors such as video games, while in Belgium rates of return and certification procedures have been altered to address operational concerns. In Italy, the tax-credit system initially established on a yearly basis was made permanent in 2013, while France has recently upgraded its tax-credit schemes in order to make them more attractive for producers and with specific measures related to animation and the co-production of TV programmes.
An immediate impact of the introduction of a fiscal incentive in most countries is an increase in production levels to a point where full (or almost full) capacity utilisation is reached. A strong growth in jobs has also been generated in response to the introduction of an incentive. One other feared impact is the automatic reduction in currently available direct funding owing to the introduction of a new incentive in a particular country – while there is little evidence of this happening.
The report, rounded off by a country-by-country analysis of the fiscal incentive schemes currently operating (in Belgium, Croatia, the Czech Republic, France, Hungary, Ireland, Italy and the UK), can be purchased here.