LOCATION FLANDERS
GUIDE TO THE BELGIAN TAX SHELTER
MADLY IN LOVE, SCENE SHOT AT THE STADSFEESTZAAL MALL, ANTWERP
THE BELGIAN TAX SHELTER WHAT IS IT? The Belgian Tax Shelter is a government-approved tax incentive designed to encourage the production of audiovisual works. It is one of the very few audiovisual systems that applies to the whole of Belgium rather than to a particular language community. It is a win-win-win situation for the three parties involved: the producer is offered a very attractive way to finance projects, the investor obtains tax exemption through a virtually risk-free investment, and the Belgian state benefits from increased economic activity and spending. The Finance Ministry estimates that from 2003 to 2011 the system channelled over €600 million into films and other audiovisual works. Tax Shelter activities continue to grow. The ceiling, if there is one, is not yet in sight.
IS IT LEGAL? Despite its name, using the Tax Shelter involves nothing illegal provided that you follow the rules and form partnerships with reputable companies. We strongly advise you to work with established local producers that are members of the producers associations (see page 15). 3
WHO CAN BENEFIT FROM IT? Producers
Only Belgian companies and Belgian branches of foreign companies (subject to non-resident corporate tax in Belgium) whose main purpose is the production of audiovisual works are eligible. They may not have direct links to a broadcaster. At the moment of signing the framework agreement, the resident or the branch of the foreign audiovisual production company may not have any outstanding debts to the Social Security Office (ONSS/RSZ). International co-productions with Belgium may apply for the Tax Shelter system, provided that they are approved as a European work as defined by the Audiovisual Media Services (AMS) Directive of 10/03/2010 (2010/13/EU) (see pages 12-13).
Investors
All resident companies and Belgian branches of non-resident companies that make taxable profits in Belgium can benefit from this tax regime, with the exception of companies whose main purpose is the development and the production of audiovisual works (i.e. producers) and broadcasters. The company making the investment may not be a credit institution on any account. There is no limit on the number of investors allowed to participate in a production. Each investor, as well as the producer(s), must satisfy their respective obligations and conditions.
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ALFIE THE LITTLE WEREWOLF, SCENE SHOT AT THE ASTRID PARK, BRUGES
CODE 37, SCENE SHOT AT THE SAINT PETER’S CHURCH, GHENT
HOW DOES IT WORK? For producers
A producer can attract one or more eligible companies to invest in one project, provided that the total amount of Tax Shelter money does not exceed 50% of the production budget. Part of this investment, up to a maximum of 40%, is usually in the form of a loan, which the producer must return to the investor as a matter of course. The remaining 60% (the equity part) buys rights in the commercial exploitation of the film. If investors don’t want to wait for the production to make money, they may arrange a “put option” to sell back their rights after a certain period. The value of this option is determined in the agreement between producer and investor, and it has to be invoked at the latest when the work begins its commercial career. The production and operating costs for the audiovisual work incurred in Belgium must amount to at least 150% of the equity part of the investment (not the loan part), thus 90% of the total Tax Shelter investment. This money must be spent within a maximum of 18 months after signing the framework agreement. Production and operating costs incurred in Belgium are understood as being: the operating costs and financial costs constituting professional income which is subject, in the name of the beneficiary, to personal income tax, corporation tax or non-resident income tax. These include, for example, the following costs: • The fee, subject to non-resident income tax or to personal income tax, for a non-resident actor shooting a film in Belgium; • The sum paid for services to a Belgian office of a foreign company. It is possible to ask the Office for Advance Decisions in Tax Matters of the Federal Public Service for Finance for an advance decision (or ruling), aimed at adjusting the final Tax Shelter application. This procedure is not compulsory, though.
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The advantage for the producer Let’s take the example of €1,000,000 financing through Tax Shelter investment, negotiated by an intermediary company. This means the production budget is at least €2,000,000. Of the €1,000,000 invested, €600,000 is equity (the required minimum) and €400,000 is in the form of a loan (the maximum allowed). With the equity part of the investment the investor buys rights in the film. This means he or she can share in the profits. Because this involves an element of risk, the investor can also decide to sell the rights back to the producer at a profit and get a guaranteed minimum return of 4.52%. This is called the “put option”. Depending on what was negotiated, this option could amount to €117,120 (i.e. €90,000 theoretical risk + the minimum return the investor wants). On the loan part, the investor in this case receives a 6.75% interest or €27,000. So, at the end of the day, the loan will be paid back in full + the interest = €427,000. Costs related to a bank guarantee on the loan and the intermediary’s fee could be €82,500, depending on what was negotiated°. In this case, the advantage for the producer therefore is €373,380 [€1,000,000 (invested sum) - €400,000 (loan) - €27,000 (interest on loan) - €117,120 (put option) - €82,500 (costs and fees°)]. On a Tax Shelter investment of €1,000,000, the producer’s advantage usually ranges from €300,000 to €400,000 or 15% to 20% of the total production budget. 8
Example* Investment €1,000,000
Equity €600,000
▼
▼
Loan + Interest €427,000
+
Put Option €117,120
150%
+
Costs & Fees €82,500
▼
▼
▼ Repayable loan €400,000
=
Spent in Belgium €900,000
To be paid by the producer° €626,620
▼ Advantage for the producer° €373,380
* on a production budget of minimum €2,000,000 ° Using an intermediary is not mandatory, so that the producer’s advantage could further climb to €400,000. Intermediary fees usually range from 7% to 15%, depending on the services supplied. 9
From an investor’s point of view The mechanism allows an eligible company (a Belgian company or a Belgian branch of a non-resident company, except for production companies and broadcasters) providing financial backing for audiovisual productions to benefit from exemption of any retained taxable profits worth up to 150% of the sums actually paid. The upper limit on investment is 50% of a company’s retained profits, up to a ceiling of €500,000. In this way, the legislator ensures limited financial risks for the investors. Part of this investment, up to a maximum of 40%, is usually in the form of a loan, which the producer must return to the investor as a matter of course. The remaining 60% (the equity part) buys rights in the commercial exploitation of the film. If investors don’t want to wait for the production to make money, they may arrange a “put option” to sell back their rights after a certain period. For example, a company invests €500,000 in a film (suggesting a minimum budget of €1,000,000) of which €300,000 is in the form of co-production equity and €200,000 in the form of a loan. It can therefore be granted an exemption of retained taxable profits amounting to €750,000, which results in a tax saving of €254,925.
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Investment €500,000
150%
▼
Example*
Investment Exemption of the retained taxable profits: €750,000 33,99% (corporate income tax rate)
▼ Direct investing (acquisition of rights) €300,000
max 40%
▼
50%
Loan €200,000
Min. production budget of €1,000,000
150%
Expenses incurred in Belgium €450,000
▼
min 60%
▼
Tax saving of €254,925
* on a production budget of minimum €1,000,000 11
WHAT ARE THE MAIN CONDITIONS? Productions must be audiovisual works that belong to one of the following categories: • Live-action or animated features, medium-length or short films and documentaries intended to be shown theatrically; • Live-action and animated made-for-television series, telefilms and documentaries. The audiovisual work must be approved by the competent departments of the Flemish, French or Germanspeaking communities of Belgium as a European work. According to the Audiovisual Media Services (AMS) Directive of 10/03/2010 (2010/13/EU), a European work can be defined as an audiovisual production: a. originating from the European Union (EU) Member States; b. originating from European third countries party to the European Convention on Transfrontier Television of the Council of Europe; c. co-produced within the framework of agreements related to the audiovisual sector concluded between the Union and third countries and fulfilling the conditions defined in each of those agreements. The application of the provisions of points b. and c. shall be conditional on works originating in Member States not being the subject of discriminatory measures in the third country concerned. The works referred to in points a. and b. are works mainly made with authors and workers residing in one or more of the States referred to in those provisions provided that they comply with one of the following three conditions:
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• They are made by one or more producers established in one or more of those States; • The production of the works is supervised and actually controlled by one or more producers established in one or more of those States; • The contribution of co-producers of those States to the total co-production costs is preponderant and the co-production is not controlled by one or more producers established outside those States.
Works that are not European works following the deďŹ nition above but that are produced within the framework of bilateral co-production agreements concluded between Member States and third countries shall be deemed to be European works provided that the co-producers from the Union supply a majority share of the total cost of production and that the production is not controlled by one or more producers established outside the territory of the Member States.
DOUBLE LIFE, SCENE SHOT AT HAVERWERF, MECHELEN 13
CO-PRODUCERS, INTERMEDIARIES & BANKS The first and best step for any foreign producer hoping to benefit from the Tax Shelter is to find a local co-production partner (see www.vfpb.be / www.votp.be / www.locationflanders.com). Investors can be approached directly to arrange investment under the Tax Shelter, although this can involve some complex legal work. An alternative is for the producer to work with an intermediary company, which will match potential investors with productions. The intermediaries make their money primarily by charging a fee to producers, while some also take commission in any profits to investors. In the early years of the Tax Shelter there was competition between intermediaries to offer the highest guaranteed return to investors. More recently, the federal government has introduced a 4.52% cap on the return intermediaries can guarantee, with any profits above that depending on the box office. As well as specialised intermediary companies, some Belgian banks have created film funds or investment products to bring the advantage of the Tax Shelter to those of their investors who want to participate. These include BNP Paribas Fortis and Belfius. This development has brought further investor confidence to the market.
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CONTACTS Producers Flemish Film Producers’ Association - VFPB Kartuizersstraat 19 b30 BE-1000 Brussels Belgium T +32 2 643 01 35 F +32 2 643 01 39 info@vfpb.be www.vfpb.be Independent Television Producers Flanders - VOTP Kartuizersstraat 19 b30 BE-1000 Brussels Belgium T +32 2 643 01 35 F +32 2 643 01 39 info@votp.be www.votp.be
Banks BNP Paribas Fortis Film Fund David Claikens; Alex Verbaere Warandeberg 3 - 1VA3D BE-1000 Brussels Belgium
T +32 2 228 90 59 / +32 2 565 25 24 F +32 2 565 27 07 david.claikens@bnpparibasfortis.com; alex.verbaere@bnpparibasfortis.com www.filmfund.fortis.com Belfius See Casa Kafka Pictures
Intermediaries Casa Kafka Pictures Isabelle Molhant Kolonel Bourgstraat 133 BE-1140 Brussels Belgium T +32 2 730 44 04 F +32 2 726 64 70 im@casakafka.be www.casakafka.be Gypsy Tax Shelter Consulting Piet Sonck Solleveld 6A BE-9550 Herzele Belgium T +32 53 60 85 89 piet.sonck@skypro.be www.gypsyproductions.be
Making Of Havenlaan 75 BE-1000 Brussels Belgium Making Of is a joint venture set up by some of the leading producers. Caviar Barbara Dyck barbara.dyck@caviarcontent.com Eyeworks Film & TV Drama Carolien Vergote carolien.vergote@eyeworks.tv Skyline Entertainment Jan Theys jan@tvskyline.com Mollywood Sara Berckmans; Kelly Heijlen Kievitstraat 44 BE-2400 Mol Belgium T +32 14 34 69 99 F +32 14 32 12 24 sara@mollywood.be; kelly@mollywood.be www.mollywood.be
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OXYGEN, SCENE SHOT AT THE BEACH OF OSTEND
Scope Invest Flageyplein 7 BE-1050 Brussels Belgium T +32 2 340 72 00 F +32 2 340 71 98 info@scopeinvest.be www.scopeinvest.be Tax Shelter Films Funding Tax Shelter.be nv Hubert Gendebien Reyerslaan 110 BE-1030 Brussels Belgium T +32 2 770 21 33 F +32 2 732 47 00 hubert@taxshelter.be www.taxshelter.be uMedia Martin Metz, Iwona Sellers, Bastien Sirodot Louizalaan 235 BE-1050 Brussels Belgium T +32 2 544 00 00 F +32 2 372 91 38 martin@ufilm.be; iwona@ufilm.be; bastien@ufilm.be www.umedia.eu
Tax Authorities & Government Bodies Ministry of the Flemish Community Department of Culture, Youth, Sport and Media Office of Policy and Management Luc Piette Arenbergstraat 9 BE-1000 Brussels Belgium T +32 2 553 46 61 F +32 2 553 45 79 film@vlaanderen.be For any further information on the system: Federal Public Service Finance Office for Advance Decisions in Tax Matters Véronique Tai Wetstraat 24 BE-1000 Brussels Belgium T +32 2 579 03 33 veronique.tai@minfin.fed.be www.ruling.be
Federal Public Service Finance Fiscal Department for Foreign Investments (Tax Shelter) Parliament Corner, Wetstraat 24 BE-1000 Brussels Belgium T +32 2 57 938 66 F +32 2 57 951 12 taxinvest@minfin.fed.be www.taxinvest.belgium.be Flanders Investment and Trade Gaucheretstraat 90 BE-1030 Brussels Belgium T +32 2 504 87 11 F +32 2 504 88 99 info@fitagency.be www.fitagency.be FIT has representatives in several countries worldwide. For more information see www.locationflanders.com
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SELECTED TAX SHELTER FILMOGRAPHY Some productions that successfully made use of the Belgian Tax Shelter system Alfie The Little Werewolf (2011): BosBros (NL), Ciné Cri de Coeur (BE) The Artist (2011): La Petite Reine (FR), Studio 37 (FR), La Classe Américaine (FR), JD Prod (FR), France 3 Cinéma (FR), Jouror Productions (FR), uFilm (BE)
Black Venus (2010): MK2 (FR), France 2 Cinéma (FR), Ciné+ (FR), Soficinéma 5 (FR), Artémis Productions (BE) Bullhead (2011): Savage Film (BE), Eyeworks Film & TV Drama (BE), Waterland Film (NL), Artémis Productions (BE) Come As You Are (2011): Fobic Films (BE) Crazy About Ya (2010): Eyeworks Film & TV Drama (BE) Double Life (TV series, 2010): Eyeworks Film & TV Drama (BE), VRT (BE) The Expatriate (2012): Informant Films Europe (BE), Informant Media (USA), Expatriate Films (CA), uFilm (BE) The Girl with Nine Wigs (2012): Goldkind Film (DE), Degeto Film (DE), Universum Film (DE), Scope Pictures (BE) The Invader (2011): Versus Production (BE), Prime Time (BE) Madly in Love (2010): Caviar Films (BE), JWP Scholte Beheer & Incredible Film (NL) Madonna’s Pig (2011): Caviar Films (BE), Climax Films (BE) Minuscule 2 (animated TV series, 2011): Futurikon (FR), Vivi Film (BE), Nozon (BE) A Monster in Paris (2011): Europacorp (FR), Bibo Films (FR), France 3 Cinéma (FR), Walking The Dog (BE), uFilm (BE) Mr. Morgan’s Last Love (2012): Bavaria Pictures (DE), Elzevir Films (FR), Kaminski Stiehm Film (DE), Senator Film (DE),
Sidney Kimmel Entertainment (USA), Scope Pictures (BE)
Oxygen (2010): A Private View (BE), Lemming Film (NL) Parade’s End (TV series, 2012): Mammoth Screen (UK), BBC Wales (UK), HBO Miniseries (USA), Trademark Films (UK), BBC Worldwide (UK), Lookout Point (UK), Anchorage Entertainment (BE), VRT (BE), BNP Paribas Fortis Film Fund (BE), Mollywood (BE)
Zigzag Kid (2012): BosBros (NL), N279 Entertainment (NL), Prime Time (BE) 18
ZIGZAG KID, SCENE SHOT AT THE BOURLA THEATRE, ANTWERP
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OTHER INCENTIVES The Flanders Audiovisual Fund - VAF The VAF/Film Fund supports audiovisual productions in Flanders, as well as international co-productions with Flanders. The aims of the Fund are threefold: to develop a sustainable audiovisual industry, to encourage and support upcoming audiovisual talent and to promote a vibrant audiovisual culture in Flanders. The Film Fund receives an annual grant from the Flanders government, which in 2011 was worth about €15 million. A minimum of 80% of the annual budget goes to production support. Filmmakers can apply for support to fiction, documentary, animation and experimental film. There are four types of support: scriptwriting, development, production and promotion support. The VAF/Media Fund was launched in 2011 in order to support the production of independent television series, co-financed by a Flemish broadcaster. The Media Fund supports three genres of series: animation, documentary and fiction series. The total budget of the Media Fund for 2011 was about €4 million. There are several types of support possible within the Media Fund: scriptwriting, development and production. For foreign series a minimum of 20% of the budget must be financed through a Flemish producer and the majority of the finance must already be in place. This means a minimum of 50% of the total budget must already be financed or the project must already have been granted support by a public film body. For foreign producers interested in accessing VAF support, the best and easiest way is to first find a local producer (see www.vfpb.be / www.votp.be / www.locationflanders.com).
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BLACK VENUS, SCENE SHOT AT GROENINGE, BRUGES
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ABOUT US Location Flanders is the central film commission for Flanders, Belgium, providing information, introductions and support to all filmmakers interested in shooting in the Flanders region. It joins the resources of the Film Offices of its member cities Antwerp, Bruges, Ghent, Mechelen and Ostend and of Flanders Image, the audiovisual export agency. Location Flanders is a member of both AFCI and EUFCN. Location Flanders aims to be your first stop for information about Flanders as a location for feature films, television films and series, documentaries, music videos, commercials, etc. Our award-winning website allows you to view the wide range of available locations in Flanders and information on how to contact the local Film Office. The database can be searched by geographical position, type of location and historical era. You can also see the professional expertise available in Flanders through our online production guide and industry database. It features local studio facilities and lists location scouts and management services, production and postproduction companies, and other providers of innovative audiovisual services. An online shooting request service allows you to receive more detailed information. Once your production gets the green light, Location Flanders and the local Film Offices will take care of shooting permits, assist you with location scouting, introduce you to local partners, liaise with the different city or regional departments and offer logistic support where possible. Location Flanders is supported by the Flanders Ministry of Culture (through the Flanders Audiovisual Fund - VAF).
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Info & Contact
Christian De Schutter Fabian Desmicht Katrien Maes Flanders Film House Bischoffsheimlaan 38 BE-1000 Brussels Belgium T +32 2 226 06 30 F +32 2 219 19 36 locationflanders@vaf.be www.locationflanders.com PHOTO CREDITS: all pictures by Bart Dewaele except: p.1 ©Shutterstock I p.2 Madly In Love ©Caviar I p.5 Alfie The Little Werewolf ©Cel Fotografie Stad Brugge I p.6 Saint Peter’s Church ©Location Flanders, Code 37 ©Menuet I p.13 Haverwerf ©Toerisme Mechelen, Double Life ©VRT I p.16 Oxygen ©Sofie Silbermann I p.19 Zigzag Kid ©Dinand van der Wal, Bourla Theatre no © I p.21 Groeninge & Black Venus ©Cel Fotografie Stad Brugge. Special thanks to the cities of Antwerp, Bruges, Ghent, Mechelen and Ostend. DISCLAIMER: The content of this flyer is of a general informative nature only. No rights can be derived from the information contained herein, as situations may arise in which such information may no longer be relevant, accurate or complete. Location Flanders (or any of its partners) is therefore not liable for any damage that may arise or has arisen as a result of action undertaken on the basis of information derived from this flyer. For up-to-date information, visit: www.locationflanders.com. This publication was closed on 23/03/2012. 23
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