Film Investments

At Paul Ryan Independent Pensions and Financial Consultants we will recommend Film Investments to certain clients. Section 481 Relief is available to individuals that meet the relevant criteria and this can be used to offset your tax liability. Over recent years we have not done as many of these investments, the guarantees have changed on some within the terms and conditions which has reduced the demand for these investments. We work closely with a number of accountants and specialist firms to allow you to invest in certain films and hence avail of the relief.

Below We have outlined a number of questions that you may have in relation to Film Investment and Section 481 relief below:

What is Section 481 Film Relief?

The Irish Government introduced IT57 Film Relief or Section 481 to try to promote the Irish film industry. The Government felt that the relief would encourage investment in Irish made films which in turn could make a significant contribution to the national economy and Exchequer. To quote from Revenue you could summarise the scheme in a number of ways:

  • The scheme provides tax relief towards the cost of production of certain films. The maximum amounts which can be raised under the scheme are:-
  •  Up to 80% of the cost of production for all budgets up to the cap of €50,000,000.
  •  In no case may the total amount raised under Section 481 exceed €50,000,000.
  • Tax relief on 100% of their investment is available to individual investors and to corporate investors.
  • Individual investors can invest up to €50,000 under the scheme in any year of assessment. An investor who cannot obtain relief on all his/her investment in a year of assessment, either because his/her investment exceeds the maximum of €50,000 or his/her income in that year is insufficient to absorb all of it, can carry forward the unrelieved amount to following years up to and including 2012, subject to the normal limit of €50,000 on the amount of investment that can be relieved in any one year.
  •  A corporate investor and any connected companies can invest up to €10,160,000 in any 12 month period. The total amount which can be invested in any one film cannot exceed €3,810,000.
  •  Investment may be made by an individual company or a corporate group. Where the total investment exceeds €3,810,000, the excess can only be invested in productions with a budget of €5,080,000 or less.
  • There are conditions governing the investment in relation to-     

          o a qualifying film              o a qualifying company
          o qualifying investors        o relevant investment 
          o shares

  • A qualifying film is a film in respect of which the Revenue Commissioners has given a certificate which takes into account the contribution that the film will make to the development of the film industry in Ireland, and the promotion and expression of Irish culture. A detailed examination of the application is undertaken by Revenue to ensure that the project complies with the statutory requirements. Revenue on being satisfied that the film will be a qualifying film for the purposes of legislation, issues a certificate to that effect.


How can I get tax relief by investing in a film?

Tax relief can be claimed at any time, after principal photography has commenced. However, a sum of money paid does not qualify for relief unless it is used within two years of payment in the production of a film. A claim for relief in respect of a Section 481 investment must be accompanied by a certificate (form FILM 3) issued by the company following authorisation by the Revenue Commissioners. The legislation contains an anti-avoidance provision. In effect relief is available only where it is demonstrated that the investment is made for bona fide commercial purposes and not as part of an artificial tax avoidance plan; that the investment is actually used in the making of a film; and that the investment will not simply be returned to the investor in some guise or other. Relief is given once principal photography has commenced, but before the company has an opportunity to satisfy all the conditions governing relief. If it subsequently transpires that these conditions cannot be satisfied the law provides for the withdrawal of the relief already given.

What are the risks of investing in a Film under Section 481 relief?

The first point to consider is that the film might not be made, it could be unsuccessful, the company behind the film could be involved in fraud or, if the technical quality is poor, the distributor or broadcaster may not accept the finished film. This is the biggest risk associated with investing in a film. That is why it is very important to identify the calibre of the people involved in putting the film together. In the film industry a "track record" is vital. We therefore will only recommend a promoter who has a proven track record.

On top of this, the Revenue Commissioners could withdraw tax relief for investors, even after a film has been certified, if the production company fails to meet the conditions of the Section 481 scheme.

How can I minimise my capital risk when I decide to invest in a film?

In a pre-sale agreement, a distributor agrees to buy the distribution rights for a film before it has been produced. The money is then paid into the production company’s bank account and must be available to pay creditors when the film is completed.

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