Tax shelter 2015 (en 2)

Reform of the Tax Shelter: entry into force on January 1st 2015 (Law of May 12th, 2014 ; Article 194ter of the Income Tax Code 1992)

What is it ? A tax advantage for Belgian companies investing in the production of audiovisual works

Tax exemption: - 310% of the sums paid - limited to 50% of any taxable retained profits - with a maximum exemption of € 750 000/year

TAX SHELTER

Financing limits:

The total sums paid by all investors may not exceed 50% of the total production budget

The fiscal value of the Tax Shelter Certificate may not exceed € 15 millions per eligible work

TAX SHELTER

Eligible Investor: resident company (or Belgian establishment of a non-resident company) which signs a framework agreement in order to receive a Tax Shelter certificate

Excluded: production company, broadcasting company, company which holds rights on the eligible work

Eligible Production company: resident company (or Belgian establishment of a non-resident company) , approved as such by the Minister of Finance

Excluded: Belgian or foreign broadcasting companies (or companies linked)

Eligible Intermediary: natural or legal person who intervenes within the negociation of the framework agreement, approved as such by the Minister of Finance

( neither Producer, nor Investor)

TAX SHELTER

Eligible works Audiovisual works: - fiction films (long, medium and short-length films) for cinema - documentary films for cinema - animation films for cinema - fiction and animation long films for television, possibly divided into episodes - documentary films for television - series for children or youngsters

European works: - as defined by the Directive of March 10th 2010, called « Audiovisual Media Services » - or bilateral co-production agreement between Belgium (or a Belgian Community) and a third country

TAX SHELTER

The Tax Shelter Certificate

System based on production expenses

Qualifying expenses = expenses EEA (direct + indirect), linked to the production

Fiscal value of the Tax Shelter Certificate =

70% of qualifying expenses EEA (if direct expenses)

limited to 10/9 of the Belgian expenses (direct + indirect)

of which 70% direct expenses in Belgium

The Investor prefinances the producer expenses and receives in return a Tax Shelter Certificate

Signature of a framework agreement

• 3 months to pay the sums

• Temporary tax deduction: sums paid x 310%

• Definitive tax deduction: 150% of the TS Certificate

• Return on sums paid: Euribor rate + 4,5% (max 18 months)

Investor Producer


EXAMPLE 1: Acquisition of a Certificate of 100 000 €

Qualifying expenses (direct + indirect) EEA: 142 858

Fiscal value of the TS Certificate =

70% of qualifying expenses EEA = 100 000

(if direct expenses)

limited to 10/9 of the Belgian expenses (dir + indir) 90 000

(ex: 90 000 x 10/9 = 100 000)

of which 70% direct expenses in Belgium: 63 000

The Tax Shelter CertificateEXAMPLE 1: Acquisition of a Certificate of 100 000 €

Advantages for the Investor

Sums to pay to the producer(for an optimal return): 48,387% 48 387

Tax exemption: 48 387 x 310% = 150 000

Tax saving: 150 000 x 33,99% = 50 990 50 990

Return on tax saving: 2 603 (5,37%)

Return on sums paid: 48 387 x (Euribor + 4,5%) x 18/12 (max)= 3 992 (5%/year)



Advantages for the Producer

Sums paid by the Investor: 48 387

To deduct: *return on sums paid (18 months): - 3 992

*intermediary fees: (ex: 10%): - 4 838

Netto Tax Shelter advantage: 39 557 (= 44% of Belgian expenses)



Qualifying expenses (direct + indirect) EEA: 1 000 000

Fiscal value of the TS Certificate =

70% of qualifying expenses EEA = 700 000

(if direct expenses)

limited to 10/9 of the (dir + indir) expenses in Belgium: 630 000

(ex: 630 000 x 10/9 = 700 000)

of which 70% direct expenses in Belgium: 441 000


EXAMPLE 3 : idem example 2, but insufficient expenses in Belgium

fiscal value proportionnally reduced

If total expenses in Belgium (dir + ind) : 500 000 (instead of 630 000)


500 000 x 10/9 = 555.555

If total expenses in Belgium (dir + ind) : 630 000

but direct expenses in Belgium: 400 000 (instead of 441 000)


700 000 – (400 000/441 000) = 634 920

The Belgian eligible expenses

Production costs, operating costs and financial costs

▪ incurred during 18 months from state of signature of a framework agreement (24 M for animation films)

▪ constituing taxable professional income for the beneficiary in Belgium (at the standard taxation system)


70% min in expenses directly linked to the creative and technical production of the work

Examples

Wages, social security contributions, shooting costs,….. Charges as regards the equipment and other technical means Postproduction expenses 25% of the transport and accomodation costs Etc.,…

If taxable in Belgium eligible expenses


30% max in expenses not directly linked to the production

Examples

Administrative and financial costs, overhead costs Expenses as regards the assistance to the production Fees paid to intermediary companies 75% of the transport and accomodation costs Etc.,…

If taxable in Belgium eligible expenses

Other obligations of the Producer

No economic or financial advantage can be granted to the investor (except commercial gifts with a low value);

The guarantee that the work will be completed and the delivery of the Tax Shelter certificate are not considered as an economic or financial advantage

To mention in the final credits the support granted by the Belgian Tax Shelter system

To observe the law of June 16th 2006 concerning the public offers for undertaking negotiations on regulated markets (see the FSMA’s prospectus).

Need to know more ?

Federal Public Service Finance Fiscal Department for Foreign Investments

Michela RitondoRue de la Loi, 24 (Parliament Corner)1000 BrusselsBELGIUM

• Email: [email protected]• Phone: +32 257 938 69• Fax: +32 257 951 12

mailto:[email protected]

Tax shelter 2015 (en 2)

Economy & Finance

Transcript of Tax shelter 2015 (en 2)