11/06/2003

There’s a battle between the French Ministers of Culture and Finance to influence the future of the tax-shelter in support of cinema and the audio-visual sector. The modernisation process of the system of tax breaks was started on April 30 by Jean-Jacques Aillagon, the Minister of Culture and Communications, but it has come up against the financial reservations of Bercy.

To overcome sets moving abroad, and to attract foreign productions, which currently prefer the advantageous conditions offered in Britain, Ireland, Belgium and Germany, the Ministry of Culture hopes to create a tax shelter mechanism similar to the one for building ships and planes. The financers would be able deduct their investments from the tax on their profits and cover almost 20% of the film’s budget. This new system should be up and running in 2004, and it will allow diversification in the funding of French cinema.

The Minister of Finance agrees with the principle, and in exchange he would like to limit the impact the measures may have on the French government’s budget, absorbing the financial package into the existing funding for the Soficas (the regional agencies that fund and finance film and audiovisual production), namely Euro 45m for a tax cost of 23m. This position is a long way from that of Jean-Jacques Aillagon, who would like to double the current sum available for tax breaks. Negotiations are now underway to reach a final decision by the summer, which will show if the good intentions lead to a real reconstruction or a simple tweak to the funding system for the cinematographic arts.

(Translated from French)