16 January 2021 The Irish Film & Television Network
     
S481 - Film and Television Financing
17 Feb 2003 :
Geraldine East of A & L Goodbody examines the repercussions of the termination of S481.

The Minister for Finance announced on 4th December 2002 “…I am bringing forward to 31 December 2004 both the termination date for film relief from 5 April 2005 and that for student accommodation relief from 30 September 2006. Given the current and prospective budgetary position, the existing demand for property investment and the desire to improve equity in the tax system, there is no justification for a continuation of these reliefs beyond 2004.”

This is at the time when Board Scannán na hÉireann/Irish Film Board has had its budget cut by 12%.

These two developments are extremely bad news for film financing and production in Ireland.

Section 481
There are always many calls upon Government funding and benefits, including taxation benefits. Each Government decides where its priorities lie and, for whatever reasons, makes its taxation allocations on that basis. There has generally been a fight to retain Section 481 financing and, on the last round of discussions, there was a fear that it would be withdrawn. The film business was therefore very pleased that it was confirmed until April 2005. This has now changed to December 2004. It is not just the early termination of film relief which is the issue; it is the statement that its continuation is not justified which is most worrying.

It is accepted in many European territories (and indeed in Australia and Canada) that film production needs local assistance if it is to survive in a business (especially a cultural one) which is dominated by Hollywood. This acceptance is based both on economic and cultural grounds. As a result the UK reintroduced tax write-offs which brought Sale and Leaseback back into operation, Australia increased the benefits available to producers and Canada operates a system of tax credits. Most Western European territories have either introduced or are looking at introducing some form of incentive to encourage film-making in their territories and to support local film-making. Despite its international success and effectiveness in past years, Section 481 is at the low end of incentives made available to encourage production. Its withdrawal will deal a devastating blow to local film producers as well as to film-making activity in Ireland by foreign productions.

Ireland is competing with the UK, the Isle of Man, Luxembourg, to name but a few, in attracting foreign productions. Section 481 enabled it to be competitive (although in recent times the level of competitiveness has reduced). Without tax incentives, there will be no reason why a foreign production or co-production would come to Ireland, other then if it was impossible to substitute another location for Ireland. That is rarely the case. At the moment, Ireland is having a hard time in competing with the UK in attracting productions and co-productions given that Sale and Leaseback deals now net in the region of 14-15% and that there are other UK tax based funders offering very attractive packages.

The North of Ireland, being in the UK, could be among the beneficiaries if Section 481 is withdrawn. By shooting in the six counties of Northern Ireland, a production can apply for Northern Ireland Film and Television Commission funding (and also Arts Council of Northern Ireland Funding, administered by Northern Ireland Film and Television Commission) as well as qualifying as a British film and, accordingly, being eligible for Sale and Leaseback funding and other UK tax-based funding. The negative impact for the North however is that where, now, a combined North/South production is attractive, this will not be the case if Section 481 is withdrawn and the North/South combination could lose out to mainland UK.

Studies of the operation of tax based funding in Canada and Luxembourg and the study being carried out by the Film Council in the UK may be helpful in assisting the Government in re-considering its position on tax incentives for film production. Studies generally find that the tax lost in giving benefits for film production are more than covered by the benefits arising from the increase in production. This is ignoring the intangible benefits arising e.g. cultural, tourism and export benefits. The question generally is not whether to provide a tax break but what tax break will give the greatest benefit for the least cost. Sale and Leaseback is inefficient in this regard, one of the reasons being that the net benefit bears no relation to the UK spend (and for co-productions the spend can be very small). Section 481 and the Canadian tax credits systems on the other hand are highly efficient, as they are spend related and the operating costs are low.

This is a period of great uncertainty for Irish film and television production, which continues a cycle of uncertainty which in turn militates against the establishment of a sustainable film industry, albeit a small one in international terms. The industry needs Governmental support, and is only really effective where it makes Ireland competitive. Quite apart from the ongoing role of Bord Scannán na hÉireann, Section 481 is a key feature of that competitiveness. It is to be hoped that the Government will look again at its position, especially when the total picture is considered, and that it will re-consider its unwillingness to continue Section 481.

Geraldine East
A&L Goodbody

Geraldine East is a partner at A&L Goodbody and is admitted to practice as a solicitor in Ireland and in England. www.algoodbody.ie





Free Industry Newsletter
Subscribe to IFTN's industry newsletter - it's free and e-mailed directly to your inbox every week.
Click here to sign up.






 
 the Website  Directory List  Festivals  Who's Who  Locations  Filmography  News  Crew  Actors
 

Contact Us | Advertise | Copyright | Terms & Conditions | Security & Privacy | RSS Feed | Twitter

 

 

 
bodrum escort bayan escort antalya gumbet escort