1. The Law
The Tax Shelter is a tax measure that seeks to contribute to improving and promoting the investment climate in the Belgian audio-visual sector.
Article 194ter and Article 416, second paragraph of the 1992 Income Tax Code allow this tax advantage.
Act of 17 May 2004 amending Article 194ter of the 1992 Income Tax Code on the tax shelter regulation benefiting audiovisual production (Belgian Official Gazette, 4 June 2004)
In brief: from January 2003 onwards, investors can enjoy a 150% tax exemption for the amount they spent on Belgian audio-visual work. This amount may partly consist of loans.
his tax exemption, however, implies a number of conditions, such as the following:
- the financing must be intended for audio-visual productions involving a Belgian production house;
- the investment must not exceed 50% of the overall cost;
- expenditure in Belgium for production and exploitation amounting to at least 150% of the tax shelter risk capital (spent within 18 months after concluding the framework agreement by the Belgian production house);
- obligatory certificate delivered by the Community concerned
2. Certificates
The Media and Film Division delivers the following certificates for the Flemish Community:
- Recognition as Belgian audio-visual work as intended in the "Television without Frontiers" Directive and insofar as it is guaranteed that sufficient expenditure has been made in Belgium.
- Confirmation within 4 years after conclusion of the framework agreement that the production is finished and that the investors' contribution does not exceed 50% of the overall cost of the audio-visual work and that it was actually used for the implementation of this budget.
3. Investors
Which investors can enjoy the tax advantage?
Belgian companies or foreign companies domiciled in Belgium.
Investors can only contribute to an accredited Belgian audio-visual work. The investment can also be spread over various works
How much can or may be invested?
The loans must not exceed 40% of the total investment.
The total budget of the investor(s) must not exceed 50% of the overall cost of the audio-visual work.
The investment is laid down in a framework agreement.
4. Tax Advantage
The investor can exempt his taxable profit to the amount of 150% of the amount invested.
This exemption is limited to 50% of the taxable profit, with a maximum of 750,000 euro per taxable period.
5. Production House
The production house is a company which is domiciled in Belgium and which takes care of the development of audio-visual works.
Television broadcasters or enterprises related to Belgian or foreign television broadcasters do not fall within the scope of this Act.
The production house concludes a framework agreement with one or more investors
6. Audiovisual Work
The following types of audio-visual works are eligible:
- As to cinema: full-length films, documentary films or animated films;
- As to television: long fiction films animated series and documentary films.
7. Framework Agreement
The framework agreement for the production of an audio-visual work is a basic agreement concluded between the production house and the investor(s).
This framework agreement must include the following information:
- name of the company and its statement of the objects;
- total amount of the investment and way in which it will be used;
- identification and description of the audio-visual work;
- determination of the budget charged to the production house and the investor(s) respectively;
- way in which the amounts foreseen are spent;
- guarantee that the production house is not related to a television broadcaster or does not carry out any television broadcasting activities by itself;
- the production house's commitment concerning expenditure.
