When film and tax go hand in hand
It won’t have escaped people’s attention that this was an exceptional year for Belgian film at Cannes. Beyond the films themselves, there is a particular mechanism that everyone is talking about: the tax shelter. For the first time this year, the Belgian federal state occupied a Village International pavilion, foregrounding the opportunities the country brings in terms of film shoots and co-production.
After its low-key launch in 2004, the tax shelter has seen exponential growth, thanks in particular to the banking sphere’s recent interest in this cultural tax incentive. By the end of 2007, over €110m had been invested in the audiovisual sector and shared out between 350 works, including 153 features.
The system can be summarised thus: for every €100 invested, €40 take the form of a loan (with around €2 interest) and €60 take the form of an investment. Tax immunity corresponds to 150% of the sum provided (i.e. a saving of €51). In the end, the investor recovers €93. For the remaining €7, the investor can transfer his rights to the producer in order to recover his outlay, or remain a partner on the film.
In 2007, Dutch bank ING got involved in the scheme, raising €13m and pledging to support Belgian film in all its diversity, guided by producers associations. Fortis recently set up the “Fortis Film Fund”, which is aimed at strong Belgian and European projects, with “prospects of high return”.
Dexia used the Cannes platform to announce its partnership with Casa Kafka Pictures (a subsidiary of RTBF) for the creation of the investment product “Movie Tax Shelter”. The objective is to back Belgian initiatives and talent and contribute to the structuring of the audiovisual sector.
Today, the tax shelter has emerged as a tool favoured by a majority of professionals. It has been described as an “indispensable and effective instrument” by Peter Bouckaert (president of the Association of Flemish Producers) that “increases funding opportunities,” according to Patrick Quinet (president of the Union of Francophone Producers).
The success of the tax shelter is such that Belgian Finance Minister Dider Reynders announced at Cannes that he was considering extending the system to include cultural and sporting events.
(Translated from French)
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