The Belgian Parliament recently approved fiscal measures and benefits in the form of a tax shelter to encourage investment in Belgian audiovisual works by Belgian companies. These measures are mentioned in Article 128 of the Programme Law of August 2 2002 and were officially published on August 29 2002. However, they are still not applicable as there is no royal decree stipulating the date of entry into force.
Under the new regime a Belgian company investing in a Belgian audiovisual production can receive a tax benefit through which it can deduct 150% of the investment of its taxable profits.
However, the investment cannot exceed 50% of the company profits or €750,000. Further, the investing company cannot be a production company, and the production company cannot be related to any Belgian or foreign television company.
To invest under these tax shelter rules one can either grant a loan to the production or invest/participate in the production (and the future benefits generated).
In order to obtain the tax benefit, the following requirements must be met:
- The production budget may only be funded by up to 50% with tax-sheltered investment. The other 50% must be raised by the production companies themselves;
- Once the tax benefit is granted the production company must spend 150% of the amount that was contributed by the investor as an investment on production or exploitation costs in Belgium; and
- The investor and the producer must agree in advance to a general financing contract for the production. Among other things, this agreement must include the amount of the investment from each party and a budget plan.
Investments under the new tax shelter must concern the production budget of:
- movies;
- documentaries;
- animated movies destined for cinemas; or
- animated series or documentaries.
These must be European productions (as stipulated in Article 6 of Directive 89/552/EEC and amended by Directive 97/36/EC).
For further information on this topic please contact Herman Croux or Peter Marx at Marx Van Ranst Vermeersch & Partners by telephone (+32 2 285 01 00) or by fax (+32 2 230 33 39) or by email ([email protected] or [email protected]).