Revenue Note for Guidance
Chapter 2 of Part 15 provides relief from income tax and corporation tax in respect of certain investments, expenditure and gifts.
This section provides relief for investment in films by film producer companies. The relief takes the form of a payable Corporation Tax credit. The credit is calculated at a rate of 32 per cent of the lowest of the eligible expenditure incurred on the production of the film; 80 per cent of the total cost of production of the film; or €70,000,000. An increased rate of film corporation tax credit, the regional film development uplift, may be claimed where
A producer company must enter into a contract with a qualifying company in relation to the production of a qualifying film. A qualifying company is a special purpose production company. A producer company must hold all of the shares in the qualifying company.The qualifying company must exist solely for the production of one qualifying film.
The amount of a film budget, which qualifies for relief under the scheme, will generally be restricted to the amount expended in the State on the production of the film. This is achieved by the inclusion of a requirement, in section 481, that a minimum amount must be expended on the employment of eligible individuals and on the provision of certain goods, services and facilities in the State.
Regulations are made by the Revenue Commissioners in relation to the operation of the relief. These Regulations are made with the consent of the Minister for Finance and the Minister for Culture, Heritage and the Gaeltacht.
“Assisted region” is defined with reference to a decision by the Commission on the areas of Ireland that can receive regional aid. The purpose of the definition is to define the geographic areas where producer companies may be entitled to the regional uplift.
“broadcast” and “broadcaster” have the meanings assigned to them by section 2 of the Broadcasting Act 2009.
“Certificate” means the formal confirmation issued by the Minister for Arts, Heritage and the Gaeltacht certifying that a film may be treated as a qualifying film for the purposes of the film tax credit.
“director” shall be understood within the meaning of section 433(4) of the TCA 1997.
“eligible expenditure” means the portion of the total cost of production of a qualifying film expended in the state on the employment of eligible individuals and on the provision of certain goods, services and facilities.
“eligible individual” means an individual employed by a qualifying company for the purposes of the production of a qualifying film.
“film” means a film that is eligible for certification within certain categories that are set out in the Film Regulations. The film must be made as a genuine commercial venture to be shown in the cinema or for broadcast. This requirement is necessary to ensure that private films or films made for some incidental purpose other than the profitable exploitation of the film are excluded. Advertising films are also excluded.
“film corporation tax credit” is calculated at 32% of whichever of the following is the lowest –
“producer company”, means an Irish incorporated and resident company, or a company incorporated or resident in another EEA state which is carrying on a trade of producing films in the State through a branch or agency. It cannot be, or be connected to a company that is a broadcaster or a company whose main business is transmitting films on the internet. It must hold all the shares in the qualifying company that is making the film. It must be trading for a minimum period of 21 months in advance of making a claim for the credit and be fully tax compliant. Furthermore, for the purposes of State Aid, it must not be part of an undertaking in difficulty as understood by the Rescuing and Restructuring guidelines.
“qualifying company” means an Irish incorporated and resident company, or a company incorporated or resident outside the State but which is carrying on a trade in the State through a branch or agency, which has been set up for the production of only one qualifying film. This ensures that the relief granted is clearly targeted for the production of a specific film so that the Revenue Commissioners are aware of how the relief is to be utilised. The qualifying company cannot have in its name the words “Ireland”, “Irish”, “Éireann”, “Éire” or “National”.
“qualifying film” is a film in respect of which the Minister has issued a certificate.
“qualifying period” refers to the most recent accounting period of the producer company, for which the specified return date for corporation tax has already occurred, that falls before the date the claim for the credit. Where the accounting period is less than 12 months, then the last 12 month accounting period before the short accounting period immediately preceding the claim date should be used.
“Rescuing and Restructuring Guidelines” refers to the 2014 Commission Guidelines for State aid for rescuing and restructuring non-financial undertakings in difficulty.
“specified amount” means the amount by which the film corporation tax credit exceeds the corporation tax paid by the producer company in the qualifying period.
“specified relevant person” means any director or secretary of the producer company at any time during the period commencing when the qualifying period commences and ending 12 months after the date referred to in subsection (2C)(d) being the date of completion of the production of the qualifying film.
“the Minister” means the Minister for Arts, Heritage and the Gaeltacht.
“total cost of production” means the part of the global expenditure of a qualifying film that meets the qualifications set out in the Film Regulations and that was wholly, exclusively and necessarily incurred to produce the qualifying film.
“undertaking” refers to an economic group or entity within the meaning used by the Commission Rescuing and Restructuring guidelines.
“undertaking in difficulty” is given the same meaning as in the Rescuing & Restructuring Guidelines.
(1A)(a) A producer company may apply to the Minister for Certification that a film may be treated as meeting the cultural criteria for the purposes of Section 481.
(1A)(b) The information to accompany the application is specified in regulations.
(1B)(a) After 1 January 2019 a producer company may also apply when making its application to the Minister for certification for an increased rate of film corporation tax credit known as a “regional film development uplift” where certain conditions are met. These conditions are that the production is largely undertaken in an assisted region, where there is a limited availability of qualified personnel, and the company provides and incurs additional expenditure training individuals within the immediate area the film is being made.
(1B)(b) The availability of the regional film development uplift tapers over a five-year period as follows:
(2)(a) The Minister may, following receipt of an application from a producer company and consideration in accordance with regulations, certify that a film is a qualifying film and specify whether or not the regional film development uplift applies.
(2)(b) The Minister for Arts, Heritage and the Gaeltacht in considering whether to issue the certificate must consider:
(2)(b)(II) Additionally, the Minister for Arts, Heritage and the Gaeltacht must specify certain conditions in any certificate given, including:
(2)(b)(c) There is no obligation on the Minister to issue a certificate.
(2)(b)(d) The Minister for Arts, Heritage and the Gaeltacht may amend or revoke any condition specified in a certificate or add to such conditions, by giving notice in writing to the producer company and in those circumstances this section will apply as if any amended, additional or revoked condition was always reflected in the certificate.
(2A)(b) A producer company may not make a claim for film corporation tax credit if any of the following conditions apply:
(2A)(f) A producer company shall not make a claim for the film corporation tax credit if
(2A)(i) A producer company is required to have such information and records available in advance of making a claim as the Revenue Commissioners may require to determine that any claim made is in compliance with the section.
In carrying out their functions under the section, the Revenue Commissioners may consult with any person, agency or body of persons and may disclose any detail of the company’s application, where necessary, for the purposes of such consultations. This includes where there is reason to believe that financial arrangements not allowed under subsection (2C)(b) have be entered into.
(2C) A company will not be regarded as a producer company if any of the following apply:
(2C)(c) A company will not be regarded as a producer company unless it provides evidence to vouch each item of expenditure in the State, or elsewhere, on the production and distribution of the film when requested to do so by the Revenue Commissioners, for the purposes of verifying compliance with the provisions governing the relief. This requirement applies whether expenditure is by the company or by any other person engaged, directly or indirectly, by the company to provide goods, services or facilities in relation to the film. In particular the evidence provided must include:
(2C)(ca) A company shall not be a producer company unless the company provides a copy of the film to the Revenue Commissioners when requested to do so for the purposes of verifying compliance with the section or with any condition specified in a certificate issued by the Minister.
(2C)(d) A company will not be regarded as a producer company unless the company,:
(2C)(da) Where a producer company makes a claim for film corporation tax credit, the company must have a compliance report available within the time specified in Regulations which proves that
(2C)(e) (2C)(f) A company will not be regarded as a producer company if it ceases to carry on the trade of producing films or disposes of its shares in the qualifying company within 12 months of submitting a compliance report.
(2C)(g) A company shall not be regarded as a producer company unless it enters into a contract with the qualifying company for the production of the film and provides it with an amount not less than the specified amount.
(2E) The Revenue Commissioners will make regulations relating to the administration of the relief with the consent of the Minister for Finance and with the consent of the Minister for Arts, Heritage and the Gaeltacht in relation to the matters to be considered by that Minister regarding the issue of authorisations.
The regulations may include provisions as follows:
(2G)(a) and (b) Where the Minister has issued a certificate, and the provisions of Section 481 have been complied with, a producer company may make a claim for the following:
The budgeted film corporation tax credit is the amount of the film corporation tax credit that would be payable if the amounts as set out in the budget of a qualifying film were incurred on the production of that film.
(2G)(c)A claim for the film corporation tax credit shall be made in the corporation tax return which immediately precedes the making of the claim, being the last corporation tax return that the producer company was required to file.
(3)(a) Where a claim has been made in accordance with the provisions of the section, the corporation tax of the producer company for the qualifying period will be reduced by an amount equal to the film corporation tax credit. The corporation tax of an earlier period will be reduced in priority to a later period.
(3)(b) Where the amount of the film corporation tax credit exceeds the corporation tax of the producer company for the qualifying period, the excess, known as the “specified amount”, shall be paid to the producer company by the Revenue Commissioners
(3A)(a) Any amount payable by the Revenue Commissioners to the company by virtue of subsection (3)(b) shall be deemed to be an overpayment of corporation tax, for the purpose only of section 960H(2).
(3A)(b) Any claim in respect of a specified amount shall be deemed for the purposes of section 1077E to be a claim in connection with a credit and, for the purposes of determining an amount in accordance with section 1077E(11) or 1077E(12), a reference to an amount of tax that would have been payable for the relevant periods by the person concerned shall be read as if it were a specified amount.
(3A)(c) Where the Revenue Commissioners have paid a specified amount and it is subsequently found that all or part of the amount is not as authorised then the company, any director of the company, or the majority shareholders of the producer company or qualifying company shall be liable to tax in an amount equal to 4 times, in the case of a company, or one hundred fortieths in the case of an individual, of the unauthorised amount.
(3A)(d) The circumstances in which an unauthorised amount arises shall include any circumstances where the amount was claimed by the producer company or paid by the Revenue Commissioners and
(3B)(a) Where the Revenue Commissioners make or amends an assessment in respect of a specified amount, the assessment will be deemed to be tax due and shall carry interest as determined in accordance with section 1080.
(3B)(b)The amount which is provided by the producer company to the qualifying company shall not be deducted in computing the profits or gains to be charged to tax or otherwise reduce the income of the producer company. Nor shall it be used to reduce the corporation tax of the producer company or be provided in a manner for the purpose of securing a tax advantage or be income of the qualifying company for any tax purpose.
(3B)(c) A failure by a qualifying company to repay any amount to a producer company shall not be a sum that may be deducted in computing the profits or gains of, or shall not otherwise reduce the income of the producer company.
(3B)(d) The producer and the qualifying companies shall be deemed not to be members of the same group of companies for the purposes of section 411 or, except for the purposes of section 626, section 611.
(3B)(e) A loss for the purposes of section 546, shall not be treated as arising on the disposal by the producer company of shares in the qualifying company.
(3B)(f) Section 626B shall not apply to the disposal by the producer company of shares in the qualifying company.
(3C) For the purposes of section 538(2) the value of the shares held by the producer company in the qualifying company, shall not, at any time, be negligible.
The Revenue Commissioners shall not pay a specified amount to a producer company in respect of a film certificate issued after 31 December 2024.
(23) Every regulation made by the Revenue Commissioners under this section shall be laid before Dáil Éireann as soon as may be after it is made. This is in line with the customary procedure in relation to the laying of statutory instruments and provides Dáil Éireann with the opportunity to annul the regulations, if it so wishes, within the next 21 days on which Dáil Éireann has sat after the regulations are laid before it.
Once the provisions of the Finance Act 2018 are commenced all future applications for the film corporation tax credit are made on a self-assessment basis. The transitional arrangements for applications on hand on the date of commencement are as follows:
(24) For qualifying films in respect of which the Minister had already provided the Revenue Commissioners with authorisation, that authorisation is treated as if it were a Minister’s certificate and the project will continue under self-assessment.
(25) For qualifying films in respect of which the Revenue Commissioners had issued a certificate that certificate is treated as if it were a Minister’s certificate and the project will continue under self-assessment.
(26) For qualifying films where the Revenue Commissioners had issued a payment under subsection (3)(b) but a full compliance report had not been received prior to commencement of the 2018 provisions the amount paid will be treated as if it had been made under the revised process and the final claim will continue under self-assessment
(27) For qualifying films in respect of which the Revenue Commissioners had approved financial arrangements prior to the commencement of the Finance Act 2018 provisions, notwithstanding such approval, a company shall not be a producer company if the financial arrangements contravene subsection (2C)(b).
1 OJ C 332, 15.11.2013, p. 1-11
Relevant Date: Finance Act 2020