Tax changes in budget seeks to enhance Ireland’s attractiveness as film destination

Salaries for Hollywood stars to be used to lower tax bill for productions shot in Ireland

Dancers shoot a scenes fron the Bollywood movie Ek Tha Tiger in Trinity College Dublin. Photograph: Bryan O’Brien/The Irish Times

Dancers shoot a scenes fron the Bollywood movie Ek Tha Tiger in Trinity College Dublin. Photograph: Bryan O’Brien/The Irish Times


The prospect of major overseas film and television productions coming to Ireland has been enhanced by new Budget measures which will make it more affordable to attract Hollywood stars.

The Government’s desire to ensure Ireland remains competitive with the UK are behind the changes.

The UK changed its taxation regime for its audiovisual industry last year, giving incentives to major television productions to film there rather than overseas.

The most significant announcement in the Budget is a change to the Section 481 tax reliefs which will allow production companies to include payments made to non-EU personnel as eligible spend.

Currently, the wages paid to actors, directors and other personnel on films can be included as eligible spend for the purposes of tax breaks if they from the EU, but Ireland is out of step with countries like the UK which also allows non-EU personnel to be included. This includes the majority of Hollywood actors.

The changes will be subject to performers paying a withholding tax in Ireland which is standard practice in many countries, but not in Ireland.

In the UK this is paid at the standard rate of 20 per cent. The performer can use it as a tax credit when they pay tax wherever they are domiciled.

Minister for Finance Michael Noonan said the measure will attract additional major film productions to Irish shores. “These productions are job rich and can often give a knock-on boost to the tourism sector. This extension will be subject to EU state-aid approval and it will be coupled with the introduction of a withholding tax,” he said.

In addition, Mr Noonan said changes to the Section 481 tax incentive will come into force in 2015, a year earlier than was planned. Currently 28 per cent of eligible spend can be raised through Section 481 reliefs and that figure will increase to 32 per cent in 2015.

The move was welcomed by Irish Film Board chief executive James Hickey, who said it was critical that Ireland was able to match the UK when it came to non-EU personnel.

“This new measure will assist Irish producers in attracting foreign direct investment in the form of international feature films and television shows which will assist in creating new Irish jobs within the sector,” he said. “You always have to keep incentives under review because TV and film productions are very mobile activities and there is a competitive environment out there. In fairness the Government has been very good at continuously monitoring these reliefs.”

IBEC audiovisual federation director Torlach Denihan said the measures should “help attract mobile foreign film investment to Ireland and support local jobs.”