Industry Report: Financing
Tax Shelter - Luxembourg
- The tax shelters set up in Luxembourg and the role of the audiovisual investment certificates (CIAV), which were introduced in 1988. The amount of the certificates is in fact fixed in accordance with the eligibility criteria and within the limit of the stated production costs and expenses incurred in Luxembourg. As a result, the promotion of the audiovisual sector has allowed for a significant number of large projects to be filmed in this small country.
Introduced in 1988, the audiovisual investment certificates (CIAV) are issued by competent ministers with the approval of the “National Fund in Support of Audiovisual Production” to production companies, resident and subject to corporate tax in Luxembourg, and whose main corporate object is audiovisual production. Producers who wish to benefit from the regime of audiovisual investment certificates should send an application to the Filmfund (www.filmfund.lu) prior to commencing production.
The amount of the certificates is fixed in accordance with the eligibility criteria outlined below and within the limit of the stated production costs and expenses incurred in Luxembourg. The certificates are issued to producers to reduce the taxable income of their company. Yet, given the modest profits of production companies, producers sometimes decide to sell theses certificates to other capital companies who can also use them to reduce their taxable income.
Holders of these certificates obtain a reduction in their taxable income referred to as a “reduction for audiovisual investment” limited to thirty per cent of the taxable income of the taxpaying beneficiary. It is entered in the accounts for the tax year specified by the “audiovisual investment certificate” (law of December 21, 1998 amending and consolidating the law modified on December 13, 1988 introducing a temporary fiscal regime for audiovisual investment certificates and the law of April 11, 1990 bringing about the creation of a “National Fund in Support of Audiovisual Production”. Further details may be found at http://www.mediacom.public.lu/legislation/textes_nat_vig
see “Production audiovisuelle”).
Conditions of eligibility
Audiovisual works likely to benefit from the regime of audiovisual certificates must fulfil the following criteria:
-the work must be completed;
-the main beneficiaries can only be capital companies;
-the work must be conceived to be produced principally on the territory of Luxembourg;
-it must offer reasonable prospects of return on investment;
-it must contribute to the development of the audiovisual production sector in Luxembourg.
The promotion of the audiovisual sector has allowed for a significant number of large projects to be filmed in Luxembourg. Moreover, growth in this sector has led to the development of a range of specialised professions, such as highly qualified technicians. One thing is sure: Luxembourg would have no film industry without state support, which has allowed for the creation of the CIAV. It is also worth noting that this sector presently creates permanent employment for a considerable number of people, while the same cannot be said for other sectors of culture in Luxembourg!
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