IBEC's Audiovisual Federation will make a presentation to the Government within the next two months seeking to have the available relief maximised and is undertaking a cost benefit analysis of Section 481.
Section 481 of the Taxes Consolidation Act 1997 offers tax relief to investors in Irish film productions. The guidelines for certification of film projects require that 75 per cent of the production work on a film is done in Ireland. The Minister for Arts, Sports and Tourism, whose responsibility it is to grant certificates, can make exceptions and lower this percentage to a figure no less than 10 per cent.
To be eligible for the scheme, an Irish-based production company must be involved. It was to this end that Spyglass invited World 2000 to co-produce Reign of Fire. Mr James Flynn, of World 2000 and a member of IBEC's Audiovisual Federation, explained that Spyglass had at first contracted his company to help find locations but then asked what World 2000 could bring to the table in terms of production costs. "When they saw Section 481, that swung it in our favour," he said.
Eighty per cent of a sum invested in a film production can be written off for tax purposes.
The sum invested is limited to a maximum of 66 per cent of a project's budget for production spends of €5.08 million or less and of 55 per cent of a project's budget for spends of €6.35 million or more. It is this relief that is supposed to attract investors in the Irish film industry. However, investments are subject to an overall ceiling of €10.48 million under Section 481 as it currently stands.
In Britain and other European countries, there is 100 per cent relief available to film investors and there is no ceiling on the total amount that can be invested in Britain and Germany. More attractive investment conditions in other European states, including Britain, where relief is available under the "sale and leaseback" legislative provision, mean Ireland is losing potential big productions, according to Mr Flynn.
"The cap is a problem," he said, "and the 100 per cent relief. We're the only country in Europe without it."
As it now stands, the guidelines for Section 481 are not due for review until 2004.
