Changes to the tax credits applicable as of january 1, 2016

Changes to the tax credits applicable as of january 1, 2016


In an objective to render the French territory more attractive for the production of theatrical and audiovisual programs, Law n°2014-1655 dated December 29, 2014 modifies the tax credits available for such programs. Applicable as of January 1, 2016, the law incentivizes both producers (with respect to the national tax credit) and line producers (with respect to the tax rebate for international productions, also known as “TRIP”) to spend production costs in France.


With respect to the national tax credit:


The changes made by this law are mainly oriented toward animation programs in order to reduce the delocalization of the production of such programs abroad, notably to Canada or the US. Accordingly, the percentage of French eligible expenditures used to calculate the amount of tax credit available to French companies is increased to 25% for both theatrical and audiovisual animation programs. Additionally, the overall cap to the tax credits that can be received for one single program is increased from 1,300€ to 3,000€ per minute produced and delivered.


These changes also address low budget theatrical motion pictures. Indeed, the increased percentage of 30% of French eligible expenditures, which has been available solely for programs with budgets below or equal to 4 Million Euros until now, has been extended to motion pictures with a budget comprised between 4 Million Euros and 7 Million Euros. This measure will enable additional financing solutions for “middle-range” pictures which are the most prejudiced by the financing decrease, according to Frederique Bredin, President of the Centre National de la Cinematographie et de l’Image Animee (CNC).


With respect to the TRIP:


The modifications provided by the law increase the percentage of French eligible expenditures used to calculate the amounts available for the tax credit (from 20% to 30%) as well as the overall cap to tax credits received on one program (from 20,000,000€ to 30,000,000€). The objective of these measures is to improve how France is perceived by the entire world as a cultural, touristic and economic destination (we note that the television series “Merlin”, which benefited from the TRIP, has generated a significant increase in visits of the Castle of Pierrefond).


These new measures are welcome at times when the financing of theatrical and audiovisual programs is suffering (reduction of approximately 20% in the financing of the French theatrical productions, and of approximately 13% with respect to international theatrical co-productions for 2014). The parliamentarian deputies which initiated such changes are convinced that they will generate a significant economic return. Let’s hope that the future will prove them right.