Regional film production wins new incentive as tax relief is extended

Budget 2019: Section 481, a vital tax credit for the film and television industry, will run until the end of 2024

Film tax relief, known as Section 481, has been extended by four years to December 2024, while an additional short-term tax incentive will be introduced for productions based in certain regions.

The tax relief, regarded by the Irish film and television industry as a vital measure for its functioning, had been due to expire at the end of 2020.

The extension had been expected as the measure allows the State to promote itself as a location for international film and television producers. The relief competes with similar incentives in other markets.

"To ensure all areas of our country can benefit from the film industry, I am also introducing a new time-limited regional uplift of up to an additional 5 per cent that will taper out over five years," Minister for Finance Paschal Donohoe told the Dáil.

The uplift, which is subject to State aid approval, will apply to productions located in areas designated under the State aid regional guidelines. Full details of this will be set out in the Finance Bill.

Minister for Culture, Heritage and the Gaeltacht Josepha Madigan described the extension as “great news”.

Screen Ireland, previously known as the Irish Film Board, and Screen Producers Ireland also welcomed the move.

“2018 has been an incredibly successful year to date, with Ireland welcoming a large number of major international productions to our shores,” said Screen Ireland chairwoman Annie Doona.

“Consistent Government support for Section 481 is imperative to enable Screen Ireland to promote Ireland as an attractive international destination for film and TV production.”

Screen Producers Ireland chief executive Elaine Geraghty said it provided “clarity and certainty” to the industry and would help create jobs.

There had been calls throughout the year for the Government not to wait until Budget 2019 to place a new sunset clause on the relief, as the industry operates on long lead times and productions that won't be filmed until after 2020 are already in the financial planning.

Corporation tax credit Section 481 film relief is used by production companies as a credit against corporation tax. If the relief exceeds the tax due, the Revenue pays the difference, making it a valuable support to qualifying productions.

The credit due is 32 per cent of whichever is the lowest of the eligible Irish expenditure (including the cost of international cast and crew working in the State), 80 per cent of the total production costs (including overseas expenses), or €70 million.

This means that under the current rules, excluding any regional incentive, the maximum tax credit per project is €22.4 million. In practice, the credit per project does not usually exceed €5 million and is most commonly less than €500,000.

To qualify, feature films, television dramas, animations and “creative documentaries” must pass a cultural test, under which they are assessed by officials from the Department of Culture, Heritage and the Gaeltacht.

Production companies have recently reported administrative delays in receiving Department of Culture approval, Revenue certification and payments.

“We look forward to continuing to work with Government and the Revenue Commissioners as refinements are made to the operation of Section 481, to make the process more efficient for our producers and for Revenue,” said Ms Geraghty.

Laura Slattery

Laura Slattery

Laura Slattery is an Irish Times journalist writing about media, advertising and other business topics