Tax Credit & Tax Shelter
Since 2008, a combined Tax Credit & Tax Shelter system for production companies and investors has been in place in Italy. This system was initially installed for a limited period of three years, available until the end of 2012. The Tax Credit is interesting for producers who do not have a registered office in Italy, who are not producing a film with an Italian certificate of origin, and who are not intending to participate in a co-production with an Italian partner. In such a constellation, is it recommended to cooperate with an Italian executive producer operating a taxable production company in Italy. This company has the right to claim a refund of up to 25% of the recognized Italian production costs. These costs may not exceed 60% of the entire production costs. Costs accrued in other EU countries may also be applied to this application for refund as long as they do not exceed 30% of the total production costs and were transacted by the Italian executive producer. Normally, the amount of the Italian executive producer’s adjudicated refund is invested as financing into the project. The amount and timing of the cash flow, the executive producer’s handling fees and all other relevant conditions should be settled and binding in a professional contract among all parties involved.
A Tax Credit in this constellation is limited to 5 million Euros per year per Italian production company and is subject to other prevailing EU cap levels of state support. Additionally, every project whose producers or investors intend to profit from the tax rebate system must pass a so-called “cultural test”. This process examines whether the EU prerequisites for the granting of state assistance are met.
Naturally, an Italian production or co-production may also apply for the Tax Credit.
As you have probably recognized, this Italian tax bonus system does indeed reveal quite a bit of complexity. It raises a lot of ambiguous issues, which, even for experts, requires extensive familiarization with the rules and regulations. We suggest that you contact the Italian producers association, Anica, for further consultation. On our website you will also find more information. We would be happy to introduce you to the Anica or to potential Italian executive producers. The Anica’s website also offers further details.