Dáil Éireann Debate, Tuesday - 25 October 2022
261. Deputy Aengus Ó Snodaigh asked the Minister for Finance the process by which a percentage of the section 481 tax relief for film production can be obtained up front in advance of production; and the way that this is calculated by headings (details supplied) in tabular form. [53459/22]
Amharc ar fhreagraThe Deputy will be aware that prior to 2015, film relief took the form of an income tax relief which provided an incentive to individual taxpayers to invest in Irish film production. The income tax scheme allowed investors in a qualifying Irish film to claim an income tax relief on their investment, once the film had been certified by Revenue and filming had commenced. In general, this was claimed by individuals against the higher income tax rate (which was either at 40% or 41% during the time this scheme operated).
From January 2015 the scheme was amended to provide relief to production companies as a credit against corporation tax. From 2015 to March 2019 the producer company applied to Revenue with a comprehensive set of information supporting the filming, post-production and financial plan for the film for certification under section 481. Revenue extracted the cultural and employment aspects of the application and forwarded same to the then Department of Culture, Heritage and the Gaeltacht for consideration. Once an authorisation was received from the Department, Revenue would scrutinise in detail the budgets and other financial aspects of the proposed claim to confirm the expected value of film tax credit and issue a certificate to this effect. The credit could be claimed by the company in one of two ways. Firstly, in two installments with an upfront claim of 90% of the expected credit based on budgeted expenditure during the production of the film, followed by a balancing payment on completion of the film based on actual spend. Alternatively, once certified, the production company could wait and claim the credit in one payment after completion of the film on submission of the compliance report.
As part of this 2015-2019 claiming mechanism, Revenue examined applications based on budgeted expenditure to certify the value of the initial 90% that could be claimed up-front. Upon completion of the film and receipt of the compliance report, Revenue conducted another full examination of the actual expenditure incurred before certifying the balancing 10% of the claim. This process meant that Revenue adjusted the value of the claim where it was incorrect. In this manner Revenue verified that the amount claimed was correct. Therefore there was no incorrect amount claimed to which interest and penalties could apply.
The relief was amended through Finance Act 2018. Applications for section 481 relief are now sent directly to the Department of Tourism, Culture, Arts, Gaeltacht, Sports and Media (DTCAGSM), who are responsible for certifying that the film is a qualifying film for the purpose of the credit. An application for certification must be made in writing to the Minister for Tourism, Culture, Arts, Gaeltacht, Sport and Media at least 21 working days prior to the commencement of the Irish production. If DTCAGSM are satisfied that the application meets the cultural and industry development requirements set out in the Regulations, the film will be issued with a certificate to be treated as a qualifying film.
Should a production be certified by the Minister for Tourism, Culture, Arts, Gaeltacht, Sport and Media, a producer company may claim the film corporation tax credit on a self-assessment basis through its corporation tax return (Form CT1), provided it has met all the other procedural and financial requirements of the relief. The producer company is required to have extensive documentation available to support the value of the claim. This documentation is set out in Schedules 2-5 of the Film Regulations 2019.
There are two options available to claimants when claiming the credit. A claimant may claim 100% of the credit based on actual expenditure. This claim must be made within 6 months of completion of the production. Alternatively a claim can be made during the course of the production. In this scenario the claim is made in two instalments. The first part of the claim may be made for 90% of the credit based on budgeted expenditure. The balance of the claim is calculated based on actual expenditure, and must be claimed within 6 months of completion. As the relief is now claimed on a self-assessment basis, any claim may be subject to review in future in accordance with Revenue’s Code of Practice for Revenue Audit and Other Compliance Interventions.
With regard to the Deputy’s request for detailed project-level data, I am advised by the Revenue Commissioners that the tax affairs of individual taxpayers cannot be disclosed due to the obligation to protect taxpayer confidentiality as provided for by section 851A of the Taxes Consolidation Act, 1997. Section 851A(8A) only permits Revenue to disclose specific taxpayer information in relation to recipients of section 481 film tax credit in line with requirements under the European Cinema Communication C332/01. As a result, the Revenue Commissioners cannot provide the detailed data requested by the Deputy. Details of beneficiaries of section 481 are published, and updated on a quarterly basis at: www.revenue.ie/en/companies-and-charities/reliefs-and-exemptions/film-relief/beneficiaries-film-relief.aspx.
My Department also published a Cost-Benefit Analysis of the film tax credit in advance of Budget 2023, which is available online at: www.assets.gov.ie/236353/40880d90-4a34-41e0-8692-076da43f813b.pdf. This report provides information at aggregate level on employments in productions supported by the section 481 tax credit.
