Film Withholding Tax
- Who will the tax be applied to?
- What is meant by artistic services?
- What payments will be taxed?
- What is the rate of tax?
- Who is the specified person?
- How will the FWT operate?
- Payment to Revenue by the qualifying company of withholding tax deducted
- Does the specified person need to complete a return of income and can they get a repayment of the withholding tax?
- What is the position regarding expenses incurred by the specified person?
- Contact Details for the FWT Unit
Section 25 of Finance (No. 2) Act 2014 introduced legislation for a withholding tax on relevant payments made by companies who qualify for the section 481 film tax credit. This new withholding tax is called the Film Withholding Tax (FWT).
The FWT will be applied to relevant payments made to visiting non-resident artistes, from outside the EU/EEA, where these artistes are engaged, by companies who qualify for the film tax credit, to appear in film and television productions made in Ireland. The Minister for Finance signed a Ministerial Order on 9 January 2015 providing for the commencement of the withholding tax on 10 January 2015.
Who will operate the withholding tax?
The withholding tax will be operated by all film and television production companies who qualify for the film tax credit (the qualifying company) and who engage and make relevant payments to non-resident artistes from outside the EU/EEA.
Where a qualifying company fails to operate the withholding tax the qualifying company shall be liable for the tax which should have been deducted and a maximum penalty of €5,000.
Who will the tax be applied to?
Ireland’s Tax Treaties with other countries include provisions regarding the taxation of artistes. Artistes who are a resident of one state may be taxed in another state in which they perform activities. There is no precise definition for the term artiste, it is regarded that it clearly includes actors but that it does not extend to support staff such as cameramen, producers, directors etc. Therefore the withholding tax will primarily apply to non-resident actors, including voice over artists, who are resident outside the EU/EEA and who are engaged by qualifying companies to provide artistic services in Ireland.
Where an individual is engaged in dual roles for example as both a director and as an actor, it will be necessary to apportion payments to the individual between the two roles. FWT should only be applied to that portion of the payment that refers to the provision of artistic services.
What is meant by artistic services?
Artistic services are defined as the services of an individual, when provided within the State, in giving a performance in audio-visual works of any kind, including films and television content, which is or may be made available to the public or any section of the public.
Where there is doubt as to whether an individual is providing artistic services it is necessary to review the overall balance of the activities of the person concerned.
What payments will be taxed?
FWT is to be applied to relevant payments and this means any payment of whatever nature made, whether directly or indirectly (for example where the payments are made to a loan out company, or a manager, an agent or any other third party), by a qualifying company in respect of artistic services provided by an artiste who is not resident in the EU/EEA. FWT is to be applied whether or not the artistic services are provided directly or indirectly (for example through a loan out company) to the qualifying company. The FWT also applies to any payments relating to the exploitation of or compensation for any rights (for example image rights) held by or on behalf of or in respect of the artiste.
The FWT is not applied to payments which are taxed through the PAYE system nor is it to be applied to expenses, which are reimbursed to the artiste or paid on behalf of the artiste, and were incurred by the artiste in the provision of artistic services to the qualifying company.
Important Note: Regarding Payments to Artistes Resident in the USA.
Under the terms of Article 17 of Double Taxation Treaty between Ireland and USA (1997) where the amount of the payments, including expenses reimbursed or borne on behalf of the artiste, made by a qualifying company to a specified person in respect of artistic services does not exceed twenty thousand United States dollars ($20,000) or its equivalent in a tax year, then FWT is not to be applied to the payments. Where the amount of relevant payments and expenses exceeds $20,000 in a tax year the full amount (excluding expenses) is subject to FWT.
There are no equivalent provisions in any other Double Taxation Treaties between Ireland and any other country.
What is the rate of tax?
The FWT is set at the standard rate on Income Tax which is currently 20%.
In certain circumstances the payment for artistic services made by the qualifying company may not be paid directly to the artiste providing the services. For example the payment may be made to a loan out company or to an agent, manager or other third party. The specified person is whoever the payment is made to.
How will the FWT operate?
There are a number of stages to the operation of the FWT by a qualifying company and these are set out below.
1. Provision of information by a specified person
When a qualifying company engages an artiste to provide artistic services, the specified person to whom payments will be made is obliged to provide the qualifying company with their address, country of residence and tax reference number in the country of residence.
2. Issuing of a certificate of deduction by a qualifying company
When a qualifying company operates FWT on relevant payments to a specified person, a certificate of deduction (Form FWT 45) should be completed by the qualifying company. Part 1 of the form should be given to the specified person and Part 2 of the form should be retained by the qualifying company as part of their requirement to keep accurate books and records.
Form FWT 45 is a secure form and is not available for download. Supplies of the form can be obtained by qualifying companies from the Film Withholding Tax Unit of the Revenue Commissioners who can be contacted by email at email@example.com. Requests for forms should include the following information:
- Name of the qualifying company,
- Tax Reference number of the qualifying company,
- A contact name and contact details,
- Address to which the forms should be sent,
- Number of forms required.
Full contact details for the Film Withholding Tax Unit are provided below.
3. Film Withholding Tax Returns
Qualifying companies are obliged to make a tax return for each calendar month in which relevant payments were made and where FWT was operated on the relevant payments. The return should include details of all specified persons to whom payments were made, details regarding the payment and the security number from the certificate of deduction (Form FWT 45) that was issued in regard to the payment.
The FWT return takes the form of a preformatted excel spreadsheet which can be obtained by sending an email to the Film Withholding Tax Unit of the Revenue Commissioners at firstname.lastname@example.org. Requests for a return should include the following information:
- Name of the qualifying company,
- Tax Reference number of the qualifying company,
- A contact name and contact details.
Qualifying companies should ensure that they are registered for Revenue’s Online Service (ROS) as all returns must be submitted electronically via ROS. On receipt of a request for a return the FWT Unit will make arrangements for the necessary permissions to be added to the film companies ROS digital certificate in order to enable the company to file the FWT return.
Returns are due to be made by the 23rd of the month following the month in which any relevant payments were made and FWT was operated, so for example the return for January 2015 is due by 23rd February 2015.
There is no requirement to submit a nil return in respect of any month in which no FWT was due to be deducted from relevant payments.
Where a qualifying company fails to submit a return that is due, the qualifying company shall be liable for a maximum penalty of €5,000.
4. How is the return submitted?
Before submitting a return the qualifying company should ensure that the return has been saved and named using the correct naming format. The naming format is case sensitive and should be in capital letters and contain no spaces.
The naming format is as follows:
- prefix of FWT to denote Film Withholding Tax, followed by
- the qualifying companies tax reference number (e.g. 1234567T), followed by
- first three letters of the month and the year to which the return relates (e.g. JAN2015).
So examples of correctly named returns would be: FWT1234567TJAN2015 or FWT1234567TMAR2015. These are the only formats that are correct.
All returns are required to be submitted electronically by the qualifying company using the secure upload facility in ROS. Companies which are not already registered for ROS should ensure that their registration has been completed in plenty of time before the return filing date of the 23rd of the month which follows the month in which relevant payments were made.
Payment to Revenue by the qualifying company of FWT deducted
The qualifying company must remit to Revenue all withholding tax deducted from relevant payments by the 23rd of the month following the month in which the relevant payment was made. This is the same timeframe within which the withholding tax return must be made by the qualifying company. So for example the tax deducted from relevant payments made in January 2015 must be paid to Revenue by the 23rd of February 2015.
All payments must be done by Electronic Funds Transfer (EFT) to the following Bank Account:
Bank of Ireland
IBAN: IE11 BOFI 9000 1793 2884 87
The company must use a narrative containing the tax type, followed by the company registration, the first three letters of the relevant month and the year the payment relates to. An example of the format is as follows: FWT1234567TJan2015.
The company making payment of FWT must also email the Collector-General’s Office at CGsHoldingAccount4Group@revenue.ie on the date the EFT payment is made with the following information; company name, tax registration, amount of FWT sent by EFT, and the period to which it relates.
Details of the EFT process are also included in the instructions that accompany the withholding tax return.
Interest may be charged on late payments.
Does the specified person need to complete a Return of Income and can they get a repayment of the withholding tax?
The specified person does not have to complete a Return of Income, unless the specified person is in receipt of other income in the State for which they are already obliged to submit a return of income. In those instances relevant payments received by the specified person from qualifying companies should be included on the Return of Income by the specified person.
Where relevant payments are the only income in the State of a specified person, the FWT deducted is regarded as a full and final settlement of the specified person’s liability in the State. FWT is therefore not refundable except in the circumstances outlined in the expenses section below.
What is the position regarding expenses incurred by the specified person?
Where an expense has been incurred by a specified person, which was wholly and exclusively incurred in the provision of artistic services to a qualifying company and that expense has not been reimbursed or is not reimbursable, a claim in respect of that expense may be made to the Revenue Commissioners. The expenses claim form (PDF, 304KB) can be downloaded and should be sent to the FWT Unit who will process the claim.
Examples of the type of expenditure that may qualify for a claim, depending on the circumstances include:
- Travel and subsistence expenses,
- Manager and agents fees.
- International air fares to Ireland immediately before the artistes involvement in the production commences and from Ireland immediately after the artistes involvement ceases.
Where the Revenue Commissioners determine that the expense incurred was wholly and exclusively for the purposes of the trade or profession either of the following will occur:
- In instances where the qualifying company has not yet made all relevant payments to the specified persons, the Revenue Commissioners will notify the qualifying company to reduce the relevant payment by the amount of allowable expenses as determined by the Revenue Commissioners, or
- Where all relevant payments due have been made to the specified person by the qualifying company, a repayment of the amount of appropriate tax charged on the amount of allowable expenses will be made to the specified person by the Revenue Commissioners. In these cases the Revenue Commissioners will issue a notification to the specified person stating the amount of the repayment.
Contact Details for the FWT Unit
Incentives and Financial Services Branch
Office of the Revenue Commissioners,