Film stars from outside EU face ‘withholding tax’
Levy brought in as ‘quid pro quo’ for change to residency requirements for tax relief
Mel Gibson in Braveheart. The film’s major battle scenes were shot in Ireland.
Big name film stars not resident in Europe will have to pay a 20 per cent withholding tax on the payments they receive from companies claiming tax relief on movie productions made here from 2015 onwards.
This is one of the measures detailed in the Finance Bill published yesterday.
This is regarded by tax practitioners as a quid pro quo for another amendment to the rules around tax relief on films.
It has amended the definition of an “eligible individual” in the rules governing the granting of tax relief for investments in qualifying films.
This removes the residence requirements so that the amount spent on an eligible individual qualifies for the relief regardless of where the individual is resident.
Previously, they had to be resident in the EU. This has been welcomed by the film industry here, as it mirrors similar rules in the UK and other European countries around tax reliefs and boosts Ireland’s competitiveness in this area.
The withholding tax will apply to front-of-camera “artistes” resident outside the EU, Iceland, Liechtenstein and Norway.
One of the main features of the new rules is that electronic returns and payments are to be made by the qualifying company.
A deduction certificate is to be issued by the company when a payment is made and tax is deducted.
Assessments may be raised by the Revenue Commissioners where deemed “appropriate”.
The tax deducted is not available for refund and allowable expenses incurred by the performing artist will not be subject to the withholding tax.
Commencement of these measures will be subject to ministerial order.
The current scheme provides tax relief towards the cost of production of certain films. The maximum amount which can be raised under the scheme is up to 80 per cent of the cost of production for all budgets up to the cap of €50 million.