Dáil Éireann Debate, Tuesday - 25 October 2022
262. Deputy Aengus Ó Snodaigh asked the Minister for Finance the work that has been undertaken to ensure that section 481 tax relief complies with both the culture test and industry development test required under European Union state aid rules; and the engagement between his Department and the European Commission on this matter since 2012. [53460/22]
Amharc ar fhreagraIn order to qualify for Section 481 relief, 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. In considering whether to issue a certificate in relation to a film, the Minister for Tourism, Culture, Arts, Gaeltacht, Sport and Media will consider whether the film will either or both:
i. act as an effective stimulus to film making in the State through among other things, the provision of quality employment and training and skills development opportunities (referred to as ‘the Industry Development test’); and
ii. be of importance to the promotion, development and enhancement of the national culture including, where applicable, the Irish language (referred to as ‘the Culture test’).
With every Section 481 application, a producer company must demonstrate how, in promoting, developing and enhancing culture, the project will act as an effective stimulus to film making in the State through, among other things, the provision of quality employment and training opportunities. Detailed information is required concerning the film’s production schedule, production budget, key personnel and employment information.
All applications must also include a Skills Development Plan. For all projects with eligible expenditure in excess of €2 million, a copy of the Skills Development Plan are submitted to Screen Ireland for approval.
DTCAGSM conduct an in-depth examination of the information supplied as part of the Section 481 application. As part of the certification process DTCAGSM officials review how the production has identified the skills needs that will be addressed through the skills development plan. DTCAGSM also check what type of skills activity, training courses and mentoring / shadowing activity will be completed as part of the skills development plan. DTCAGSM examine the curriculum vitaes of the Heads of Departments (e.g. Producer, Director, Writers) to ensure there is a strong track record of experience and expertise in the industry which can be passed on to the less experienced individuals on the production.
Applicants must also complete an undertaking in respect of quality employment. This undertaking commits applicants to compliance with all relevant employment legislation and to have in place written policies and procedures in relation to grievances, discipline and dignity at work (including harassment, bullying and equal opportunity). These conditions shall be met by both the producer company and the qualifying company. If an applicant does not comply with the employment and skills development requirements set out by the Minister, they may not be eligible for the corporation tax credit. Any amount already claimed may be recoverable, with interest.
To ensure aid is provided to projects which promote European culture, the scheme must have an effective verification mechanism in place. The mechanism applicable to Section 481 is the Culture Test. As part of the application to DTCAGSM, applicants must demonstrate how the project will be of importance to the promotion, development and enhancement of the national culture.
If the application is successful, the Minister for Tourism, Culture, Arts, Gaeltacht, Sport and Media will issue a certificate to the applicant.
Both the Department of Finance and the DTCAGSM have engaged with the European Commission in recent years in relation to Section 481.
Prior to 2015, the scheme operated by giving tax relief to individuals investing in the film industry. From 2015 the scheme provides direct support to film producer companies in the form of a tax credit. DTCAGSM engaged with the European Commission to seek approval for this amended relief structure. In October 2014 the Commission published its decision to approve the aid and the new relief came into operation from January 2015.
In 2017, Section 481 was reviewed by the Directorate-General for Competition of the European Commission as part their ex-post monitoring of aid measures implemented by Member States. This review examined whether the scheme respected the provisions of the applicable aid rules and the Commission’s decision to authorise the aid. The review also included a sample of individual aid awards granted under the scheme. Following this monitoring, DG Competition considered that the scheme and the individual aid granted on the basis of the scheme was in line with their prior decisions with regard to its operation.
Finance Act 2018 amended the certification process for the relief, introduced a short-term, tapered regional uplift for productions made in areas designated under the State aid regional guidelines, and extended the availability of the relief to 31 December 2024. The extension of the relief and the introduction of the regional uplift was subject to European Commission state aid approval, which was received in June 2019.
