DUBLIN — Improvements in the national tax incentive scheme and a revitalized Irish Film Board have contributed significantly to an upswing in production activity, both domestic and international, in Ireland over the past eight years.
Updated in June 2000, Section 481 of the Irish Tax Act (formerly Section 35) allows Irish taxpayers to invest up to $28,500 a year in film production in Ireland and to deduct up to 80% of the investment; 75% of work on indigenous projects must be done in Ireland to qualify for 481 certification, 10% if a co-production.
Strong Irish content is not necessarily a requirement for 481 eligibility: “Braveheart” and “Reign of Fire,” among other projects, have taken advantage of the scheme.
Since Ireland signed the European Convention on Cinematic Co-productions in August, Irish pics are able to tap other Euro tax incentives, such as U.K. sale and lease-back arrangements, at the same time as 481.
A key source of funding for indigenous projects is the Irish Film Board, an increasingly important force since it was reorganized in 1993. It provides loans and equity investment to about 100 projects a year; investments range from $2,280-$28,500. The board contributed approximately 15% of the budget of recent Irish hit “About Adam” and also had a stake in Roddy Doyle’s “When Brendan Met Trudy.”
While film board business development manager Andrew Lowe says the development of indigenous talent is the board’s priority, companies and projects don’t have to be 100% Irish to qualify for board funding — “Peaches,” which was shot in Dublin by a British company, recently received completion funding.
Section 481 funding: The max Irish spend that a pic with an under $4.6 million budget can raise under 481 is 66% of its budget, 55% for pics with budgets over $4.6 million, subject to a ceiling of $9.4 million. Producers usually net between 11%-12% of their total budget from 481 investment. In 2000, the scheme raised $71.4 million.
Irish Film Board: 2001 budget for development and production is $7.4 million, slated to go up to $10.8 million by 2003.
Double taxation treaties: In certain cases, non-Irish owners of Irish companies can receive their after-tax profits without any further tax payable to them in their home countries (qualifying countries include the U.S., U.K., Australia and Canada).
10% tax rate: Companies based in selected areas of Ireland pay 10% tax on income after deduction of trading expenses. Film companies must do 75% of production in Ireland to qualify for the rate.
Tax exemption scheme for individuals: “Creative artists” (including writers, visual artists and composers) don’t pay individual taxes in Ireland; but “interpretive artists,” such as directors and actors, cannot tap the scheme. Open to Irish passport-holders and non-native residents
Eurimages: Ireland has participated in Eurimages since 1992, and is the only English-speaking country in the Euro Commission scheme that provides up to 10%-12% of production budgets.
Attorney James Hickey of Matheson, Ormsby, Prentice Soliciters (Dublin), specializes in film financing deals, including 481
Osmond “Ossie” Kilkenny, chair of the Irish Film Board, best-known as a music industry accountant (he does U2’s books), but also an expert in film financing
Michael O’Sullivan, senior manager of media and entertainment at Anglo-Irish Bank
Catherine Ryan, marketing manager at Allianz Ireland, only film insurance underwriter in Irish market
“The Letters” (Parallel Films, London-based Warner Sisters), directed by Michael Radford, written by Lise Ann McLaughlin
“Reign of Fire” (Spyglass/Touchstone), budget $80 million-plus (includes 481 revenue), directed by Rob Bowman and starring Matthew McConaughey