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Ireland: Offshore Business Sectors

Film Financing

Ireland has seen considerable success in encouraging film production through a combination of subsidy programmes and tax breaks.

In 2003, then Finance Minister Charlie McCreevy decided to end the system of tax breaks for film financing in Ireland. According to film-makers, the so-called section 481 tax breaks had contributed to year on year growth of 18% in the industry, and account for 107 million euros of Ireland's GDP. The industry also directly employed 4,300 people, bringing a further 49 million euros into the labour market.

Lobby groups urged the government to extend the tax breaks for a further ten years, by which time they estimated that the industry will employ up to 11,000 people with turnover rising from 103 million euros to 550 million euros. The cumulative effects of allowing the tax break to lapse in 2004 would result in 80% of the industry being lost, the body claimed.

The government bowed to pressure, and in its 2004 budget extended the Section 481 scheme until 2008. In May 2006, it emerged that the European Commission had endorsed a new system of tax incentives designed to encourage growth in the Irish film industry, announcing that the scheme does not constitute state aid.

The Irish scheme to support film production amended an earlier scheme previously approved by the Commission, and allows film production companies to obtain 80% tax relief on investments of up to EUR35 million or 80% of the production budget of a single film.

Additionally, Finance Minister Brian Cowen announced in the 2006 Finance Bill that the percentage of expenditure that is eligible for tax relief would be raised to 80% for all films, up from the existing levels of 55%-66%.

In 2008, the Irish government introduced new measures to strengthen Section 481, increasing the ceiling on qualifying expenditure for any one film from EUR35 million to EUR50 million. Qualifying expenditure includes all EU personnel and purchases of goods and services in the State. Projects may derive a benefit of up to 28% of their eligible Irish expenditure.



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