Irish Producers must maintain their rights and become their own distributors said Gerry Shirren, CEO,
Terraglyph, who spoke at the IBEC Seminar at the Radisson Hotel, Galway Film Fleadh.
Gerry spoke about section 481 from the Animation perspective and asked why are we forcing the producer to sell/dispose of their rights to third parties. He said that the successful producers are the ones that have become their own distributor. The current guidelines are working against the producers. The 481 incentives pose major difficulties for the smaller projects within the low budget sector. Over half the Animation companies in Ireland have never used 481 nor could they. It is too expensive for any low budget project to implement 481. Most don’t have completion bonds in place and the insurance companies won’t insure them. The Government must engage and address these issues with the lower budget sector.
James Flynn of Metropolitan Films agreed with Gerry and looked at the various changes made to 481 from when investment was just limited to Companies and right through the boom years between ’93 to ’96 when investors were allowed 100% relief. From ’96 until 2000 there was a fall off on investment because of the reduction to 80% tax relief, but still a steady flow. In 2000, the Government ratified the legislation to incorporate the Sale and lease back options which then allowed a project qualifying as a co-production to combine 481 with Sale & Leaseback which could ultimately amount to a 20% equity fund.
As Flynn sees it four main changes are immediately needed. The Department must:
1) Engage with the lower to medium size productions to make 481 more accessible for them.
2) Allow a 100% relief to the investor (UK, France, Germany, Denmark, all have 100% relief)
3) Extend the cap (UK has no cap on Sale & Lease back and Ireland can’t compete)
4) Extend the 481 to 2010 and beyond(In the UK, their tax incentives are in place in perpetuity). This extension should be put in place immediately to allow the industry to plan strategically for the future and beyond the current 2005 deadline. For example Disney are currently planning a project for two years from now but the difficulty is that the 481 tax benefits may not be available come the production date.
In conclusion, Flynn said the incentives are working for the larger productions. He refers to the 481 success on ‘Reign of Fire’ with an overall budget of circa Euro 90 Million. Around Euro 10.5 Million was successfully raised through section 481. Euro 35 Million was spent in the Irish Economy Euro 10 Million was paid in TAX, PAYE, PRSI, and est. Corporation Tax. 700 Jobs were created for the production The overall probable cost to the Exchequer was Euro 3.5 Million
