Belgium Launches New Tax System For Film Finance

by Ulrika Lomas, Tax-News.com, Brussels

21 May 2003

Belgium has recently unveiled its new tax based film financing system, which will allow backers of films certified in the country to reduce their corporation tax in return for guarantees that production money will be spent in Belgium.

The scheme was given the go-ahead last month, and the first productions to benefit from it are likely to take place in the coming autumn. It will allow a corporation to take a 150% reduction against their investment, whilst producers are required to spend 150% of the equity portion of the investment within Belgium itself. There will be a EUR750,000 limit on any single investment, although several investments can be combined within a high budget production, according to the Screendaily.com news service.

Representatives from the film production industry have commended the measure, noting its simple structure and compatibility with similar European schemes. However, there are fears that the relatively low investment ceiling will be a deterrent to many of the larger film industry backers.

Commenting on the move, UK based producer Michael Cowan told Screendaily: "This is certainly good for Belgian producers as it should create business and structure," adding that it should be compatible with the UK's sale and leaseback system.

Meanwhile Pierre-Philippe Hendrickx, a Belgian entertainment lawyer, praised the new system, which he said would take away much of the risk for those investors who have little knowledge of the film industy. However, he said there may have to be some amendments to the legislation for it to comply fully with EU law.

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