On 12 January 2015, changes to section 481 TCA 1997 came into effect that ended income tax relief for individuals or corporates who invested in a “qualifying film”. The relief was replaced by a payable film corporation tax credit to a qualifying “Producer Company” (PC).
The Revenue Commissioners have issued guidelines on the new legislation in “Guidance Note for ‘Section 481’ Investment in Film” and they have also published new Regulations – Film Regulations 2015, S.I. 4 of 2015. Despite the change from an income tax relief to a corporation tax credit, the section under which the relief is provided remains the same.
The consequences of tax non-compliance of the PC, the QC, the shareholders of the PC and the directors of the PC and the QC are significant. Irish production companies could be involved in film projects with multi-million-euro budgets that obtain significant levels of section 481 film corporation tax credit compared to the size of their balance sheets.
Should the Revenue Commissioners choose to exercise the full extent of their powers under section 481 if a difficulty arose, there is a huge risk to the parties involved, at both a corporate and a personal level. The companies and their tax agents should take additional care to ensure that all returns are filed correctly and on time under all tax heads and that all Revenue correspondence is dealt with in a timely fashion.
The Revenue Commissioners have made amendments to the guidelines on a number of occasions since the start of 2015. If you would like any more information on the new section 481 tax credit, please see our factsheet: Section 481 - Ireland's 32% Film and TV payable tax credit