Film Relief - IT57
Please note that the scheme outlined below is closed to new applications. For further information on the replacement scheme please see Film Relief under Corporation Tax
The Scheme was introduced to promote the Irish film industry, by encouraging investment in Irish made films which make a significant contribution to the national economy and Exchequer and/or acts as an effective stimulus to the creation of an indigenous film industry in the State. The scheme was broadened in 1993 to include individual investors. The details of the scheme are contained in Section 481 of the Taxes Consolidation Act 1997.
Summary Of The Scheme
- The scheme provides tax relief towards the cost of production of
certain films. The maximum amounts which can be raised under the scheme
- up to 80% of the cost of production for all budgets up to the cap of €50,000,000.
- in no case may the total amount raised under Section 481 exceed €50,000,000.
- Tax relief on 100% of their investment is available to individual investors and to corporate investors.
- Individual investors can invest up to €50,000 under the scheme in any year of assessment. An investor who cannot obtain relief on all his/her investment in a year of assessment, either because his/her investment exceeds the maximum of €50,000 or his/her income in that year is insufficient to absorb all of it, can carry forward the unrelieved amount to following years up to and including 2015, subject to the normal limit of €50,000 on the amount of investment that can be relieved in any one year.
- A corporate investor and any connected companies can invest up to €10,160,000 in any 12 month period. The total amount which can be invested in any one film cannot exceed €3,810,000.
- Investment may be made by an individual company or a corporate group. Where the total investment exceeds €3,810,000, the excess can only be invested in productions with a budget of €5,080,000 or less.
- There are conditions governing the investment in relation to-
- a qualifying film
- a qualifying company
- qualifying investors
- relevant investment
Summaries of these conditions are outlined in the following below:
A qualifying film is a film in respect of which the Revenue Commissioners has given a certificate. Certification takes into account the contribution which the film will make to the development of the film industry in Ireland, and the promotion and expression of Irish culture. A detailed examination of the application is undertaken by Revenue to ensure that the project complies with the statutory requirements. Revenue on being satisfied that the film will be a qualifying film for the purposes of legislation, issues a certificate to that effect. Revenue is not obliged to certify a film, and if an application for certification is made after filming has commenced, Revenue will not certify the film. Revenue may also attach certain conditions to the certification of a film.
A qualifying company for the purposes of the scheme, is an Irish incorporated and resident company, or a company which is carrying on a trade in the State through a branch or agency. The company must exist solely for the production and distribution of one and only one qualifying film. This ensures that the funding is clearly targeted for the production of a specific film so that the investor will be aware of how the investment is to be utilised. A film company seeking Section 481 finance cannot have in its name the words "Ireland", "Irish", "Eireann" , "Eire" ,or "National".
A qualifying investor is an individual investor who is not connected with the film production company. An individual is connected if he or she or an associate controls the company. An allowable investor company is a company which is not connected with the film production company. In general companies are connected with each other if one controls the other, or both are under the control of the same person or persons.
In order to qualify for relief, an investment must be a relevant investment.
A "relevant investment" is a sum of money which is paid:
- directly by the investor, on his own behalf;
- in a qualifying period;
- in respect of shares in a qualifying company;
- for bona fide commercial reasons and not as part of a scheme or arrangement the main purpose or one of the main purposes of which is the avoidance of tax; Any scheme whereby an investor has not the possibility of recovering more than his investment cannot be regarded as a bona fide commercial venture.
- at risk to the investor;
- to be used within 2 years, for the purpose of enabling the qualifying company to produce a qualifying film; and
- on the basis that it will not be repaid otherwise than in the event of the company failing to have a film certified.
The minimum limit on a relevant investment is €250.
A relevant investment made by one spouse may be treated as being made by the other spouse where a married couple have elected to be jointly assessed in the name of the latter spouse.
The investment must be made in new Ordinary Shares, i.e. shares which do not have a right to a dividend at a fixed rate and which have no existing or future preferential right to a dividend or to redemption or to the film company's assets in a winding up.
Tax relief can be claimed at any time, after principal photography has commenced. However, a sum of money paid does not qualify for relief unless it is used within two years of payment in the production of a film. A claim for relief in respect of a Section 481 investment must be accompanied by a certificate (form FILM 3) issued by the company following authorisation by the Revenue Commissioners.
The legislation contains an anti-avoidance provision. In effect relief is available only where it is demonstrated that the investment is made for bona fide commercial purposes and not as part of an artificial tax avoidance plan; that the investment is actually used in the making of a film; and that the investment will not simply be returned to the investor in some guise or other.
Withdrawal of Relief
Relief is given once principal photography has commenced, but before the company has an opportunity to satisfy all the conditions governing relief. If it subsequently transpires that these conditions cannot be satisfied the law provides for the withdrawal of the relief already given.
Capital Gains Tax
In relation to capital gains tax an investment under the scheme is treated favourably. In computing gains for capital gains tax purposes there is a general rule that any amount which has been allowed as a deduction from income tax or corporation tax cannot also be allowed for capital gains tax purposes. This rule will not be applied where an investment in a company was by way of a subscription for new ordinary shares and the shares are held for at least one year. In such cases the amount of the purchase price of the shares will be allowed as a deduction in computing any capital gain on their disposal, notwithstanding that tax relief has been given in respect of part of that amount. If the shares are sold at a loss this treatment will not operate so as to create a tax allowable loss for capital gains tax purposes and the sale of the shares will be dealt with on a no gain no loss basis.
Queries on the Scheme
Any queries in relation to the scheme should be addressed to:
Corporate Business & International Div.,
Office of the Revenue Commissioners,
E-mail: Film Relief
Status of this document
This document is not a legal interpretation of any of the legislation on which the scheme is based. Nor is it intended as a comprehensive guide to the scheme. It is a general information guide to Section 481 relief.
Note: Full details can be found in Part 15, Section 481 of the Taxes Consolidation Act 1997.
Further information on the scheme can be found at the following links:
- S.I. No. 357 of 2008 - Film Regulations (PDF, 140KB)
- Guidance notes for Film Producers and Promoters on the Certification of qualifying films under Section 481 (MS Word, 223KB)
- Guidance notes for Producers and Promoters on Post Certification Requirements for Qualifying Companies (MS Word, 151KB)
- Guidance notes for Taxation of Individuals Engaged in the Irish Film Industry (MS Word, 95KB)