Film Finance

Horwath Bastow Charleton is the leading accounting and business advisory firm providing Section 481 film financing services. Section 481 is a tax relief available to Irish investors who invest in Irish film and television projects by buying shares in a special purpose film/television production company.

Section 481 is a unique relief in that it is relatively low-risk and provides an immediate return to investors in less than 12 months. Typically, an investor will generate a return of €4,000 by investing €16,500 on day one and receiving a tax refund of €20,500 in less than 12 months.

The relief is administered by the Irish Revenue Commissioners, who must certify each eligible project before the investment can be secured. Tax relief is available when certain conditions are met and essentially when the film is successfully delivered to the producer. The success of the film at the box office or on DVD release does not impact on the availability of the tax relief or the level of return that the investor will receive. Horwath Bastow Charleton have been involved in the financing of 39 projects since 1991, all of which have been 100% successful in terms of delivery and the availability of tax relief.

After Section 481 investment became available to individual investors during the early 1990s, Ireland quickly became one of the most attractive film locations in the world, with a relatively low cost base and a generous tax incentive scheme. That competitive advantage has been eroded somewhat in recent years. In particular, the introduction of the United Kingdom’s new film tax credit scheme impacted adversely.

To boost employment in the industry and re-establish Ireland as one of the most attractive global locations for film and television production, significant improvements to Section 481 relief were introduced on 16 March 2009. This makes Section 481 investments even more attractive for tax payers in a time when all other tax reliefs are either being abolished or scaled back in terms of their value to the taxpayer.

The new changes result in an increase from €31,750 to €50,000 in the annual investment limit for each individual taxpayer and an increase from 80% to 100% in the amount of the investment that qualifies for income tax relief. This means that for each investor, the available tax relief in cash terms will nearly double from €10,414 to €20,500 for a top-rate taxpayer.

Previously, an investor making a gross investment of €31,750 received a net benefit of approximately €2,000 once the tax relief was received, a return of approximately 25% on the investor’s cash funding. Under the new rules, investors will achieve a higher percentage return on the cash element of their investment in comparison to what was previously available (i.e. €4,000).

The effect of the new changes means that investors who have the required tax capacity can more than double their annual benefit from investing in films. As this type of investment is relatively low risk and provides a return to the investor in less than twelve months, Horwath Bastow Charleton are anticipating a surge in demand for film investments in 2009 and beyond.

These changes will also greatly improve the producer’s “net benefit” on Section 481 projects, from approximately 20% of eligible expenditure to up to or in excess of 28% of eligible expenditure, depending on various factors including project scale and are to be warmly welcomed.

John Gleeson Appointed Partner at Horwath Bastow Charleton
23 April 2010
Horwath Bastow Charleton, one of Ireland's leading Chartered Accountancy and Business Advisory practices, is pleased to announce the appointment of John Gleeson as Partner, Taxation and Film Finance.[read on]

Investors can Strike Gold on Silver Screen
30 June 2008
Article from the Sunday Independent 24 February by Louise McBride Before investing in film, do your homework -- or your dream of Hollywood could turn into a horror movie.[read on]