Tax incentives: a close look at eight countries and their systems
Having noticed an increase in relocations of French feature film production in 2010, particularly in Luxembourg and Belgium, the National Film and Moving Image Centre (CNC) commissioned a comparative study of different foreign systems of tax incentives for film and audiovisual production, closely examining the systems in force in Belgium, Luxembourg, Germany, Ireland, Hungary, the UK and Canada.
The very comprehensive, 133-page long report reveals that the French tax credit is the least attractive when it comes to purely financial criteria with 20% of expenditure eligible in France compared to 29% to 39% in Belgium and from 25% to 65% in Quebec. The French system’s €1m ceiling is also unimpressive compared with the systems in Belgium (50% of the film’s cost), Canada (15% and 32.5% for federal and provincial systems), Luxembourg (€2.5m), Germany (€4m with some cases up to €10m), Ireland (80% of Irish expenditure eligible within the limits of €50m), the UK (80% of expenditure in the country with no maximum cap on absolute value) and Hungary (no ceiling in absolute value, nor in percentage of expenditure).
The French tax credit is also the most restrictive system, for it is almost incompatible with the others and requires a film shoot (except in the case of reasons justified by the screenplay) and post-production on French territory whereas the other countries are more flexible. However, the Belgian tax shelter and Canadian tax credits are theoretically compatible with the French system.
In total, the French tax credit represents only 7.8% of the production cost of accredited French initiative films compared to 18% of the budget for features benefiting from the Belgian tax shelter, 13% for films under the German system and 12% on the Irish side.
For certain French producers, co-producing (particularly with Belgium, Luxembourg and Ireland) is worthwhile because they only lose the French tax credit and can combine different financing: other national or regional funding sources in the co-production territories, Eurimages, etc. Whence, as soon as the tax credit is lost in France, there is a strategy for relocating the less structural expenditure in order to benefit from more advantageous costs. It should be noted that the majority of French producers who responded to the study co-produce for reasons that are almost systematically financial, stating that the film could not have been produced under the right conditions or not produced at all if it had been a 100% French production with the tax credit.
However, the study also underlines that the major advantage of the French tax credit is to enable producers to avoid co-productions which, although very advantageous from a financing point of view, often increase the estimated budget and lead to a loss of total control over the film’s production. This point is counterbalanced by the fact that producers who have found a co-production partner in another country who is considered reliable, are rather inclined to repeat the co-production experience in order to maximise financing.
To read the CNC’s study, click here.
(Translated from French)
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