THE IRISH FILM industry is booming. This year it had a turnover of over €500 million and employed 6,500 people in full-time jobs. That is up 20 per cent since 2008 but there is still a skills’ shortage. The importance of the sector should not be underestimated.
Last week’s announcement by the Irish Film Board (IFB) that on the back of their €10.5 million investment in 30 film productions in 2012 they raised €118 million through foreign direct investment by Irish producers, outlines the success that Ireland’s film industry is having. €80 million of this was invested directly into the Irish economy through the purchase of local services and employment. The raising of such significant sums highlights the importance of the Irish film sector as an exporter and revenue raiser. Thankfully the government appears to appreciate this as Ireland’s film industry was one of the few winners in the Budget.
Minister Noonan announced that he was going to continue the tax benefits for investors in the film business, generally known as Section 481, until 2020. However from 2016 the emphasis will move from one of tax relief on the investments to a system of tax credits. This should shift the emphasis away from relying on high-net-worth individuals to opening up the industry to small investors.
As it stands this successful scheme encourages investment in qualifying Irish productions. High-net-worth investors (or more accurately their banks) can obtain a tax relief on an investment of up to €50,000. In cash terms this means an investment of €50,000 means a tax relief of €20,000 to the investor. However, with banks less willing to lend and there being lot less high-net-worth individuals in the country willing to invest €50,000, a change was need in order to ensure the film industry was protected.
The success of crown-funding websites like Fundit.ie has shown that there is a market here for large numbers of small investors to help boost the arts. Fundit.ie not only garners financial support for films, but also music, books and any other art related productions. However, with the possibility of a tax credit, this should be welcomed by small investors in film productions.
The reasons the Minister stated in the Budget for the switch of emphasis from granting tax relief for investors to a tax credit system is “so as to ensure better value for taxpayers’ monies and eliminate the need for high income investors to provide funding for the scheme”.
I assume that the Minister means that if somebody makes an investment in a film production, no matter how small that investment is, then the investor will be entitled to a tax credit in return for their investment. This should in theory encourage smaller investors to take the plunge in relation to movie production investment and should also reactivate interest in the market, especially if citizens with a low income are encouraged to invest in film production.
We do not know exactly what the scheme or law will be until the Minister publishes a Finance Bill in relation to the provision, but what is good news is that the government are paying attention to this issue and the importance of the film industry to Ireland.
By introducing a more flexible and simple investment structure for the Irish film industry it will hopefully encourage and attract more people to this area once more.
Over 6,000 people are directly employed in film production in Ireland. Unlike multinationals involved in computer and drug exports, the film industry in Ireland is more in line with the food industry – it is not just about employing people, it is not just about profits, it is about cultural exports.
It is a way of selling Ireland throughout the world, making people laugh or cry and be entertained, which may also encourage them to visit Ireland. But more than that, it allows the world to know that Ireland is open for business and can make a significant contribution to culture globally.
At the time that our Minister for Finance was releasing his Budget, the UK’s Chancellor of the Exchequer was releasing his winter statement indicating that he was reducing the rate of corporation tax in the UK. Like our corporation tax rate our film industry is also under attack from the UK and the rest of Europe.
The Tudors and Camelot, both high profile productions that covered significant parts of British heritage and history were filmed in Ireland. There have been other examples of what are extensively British productions being made in foreign jurisdictions.
The UK government has taken note of this and also the success of UK made productions such as the TV series Downton Abbey in terms of both the economic and cultural benefits. In response, they’ve in introduced a tax measure for ‘high-end’ productions known as ‘Downton Relief’.
This is big step with a view to maintaining and protecting British productions but also to encourage other productions, such as those that would have originally come to Ireland.
In terms of movie locations, Northern Ireland sees itself as a separate entity from both the Republic and the UK mainland. Currently, Game of Thrones is filmed in Northern Ireland, which is actually causing difficulties for other productions both in the North and the Republic.
HBO, the US channel behind the Game of Thrones, clearly wants to employ the best craftsmen, tradesmen and extras they can and in so doing have sourced many of these people for these positions on both sides of the border. This has caused a shortage in the Irish film industry where there are a number of vacancies, particularly for skilled craftspeople.
These are all important issues. It is a precarious but no less exciting time for the Irish film industry. There are opportunities to encourage employment and market Ireland on a global scale. Huge inducement is made for non-national exporters into this country and hopefully the Minister for Finance will make as many concessions to the indigenous export sector, the Irish film industry.
Moving to allow smaller investors to participate in movie production and encourage interest in the film industry is definitely an encouraging step in the right direction in order to make 2013 as successful for the sector as 2012.
Simon Carty is a solicitor who specialises in entertainment law and is a member of the production team for the BBC/RTE series Mrs Brown’s Boys.
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