French film tax incentives less attractive than key EU counterparts, says CNC

France’s National Cinema Centre has urged the French government to review the country’s film tax credits, after a survey comparing them with seven other national incentive schemes revealed they were less attractive than those of neighbouring territories such as Belgium and Luxembourg.

“The study revealed that France’s crédit d’impot tax credit is from a financial point of view, less attractive than the other schemes examined. The mechanism is more restrictive, has a lower relief ceiling and a narrower range of eligible expenses,” the CNC said in a statement.

“This study is meant to be food for thought for the French authorities, as well as those of the European Commission, responsible for fixing state support for cinematic and audiovisual works,” it added.

The 133-page survey, conducted by consultancy firms Hamac Conseils and Mazars, compared France’s tax incentives with similar schemes in European territories Belgium, Britain, Germany, Hungary, Ireland and Luxembourg as well as those of Canada.

Its conclusions focused on France’s crédit impot mechanism rather than the newer TRIP tax incentive, offering a 20 percent rebate on French-based costs to foreign film productions spending at least one million Euros in France.

The CNC said it had commissioned the research after its 2010 survey of film production revealed Belgium and Luxembourg tax incentives were continuing to lure French productions across the border. 

The study revealed, for example, that the crédit d’impot’s maximum tax deduction of €1.0 million, paled in comparison with €2.5 million in Luxembourg, Germany’s ceilings of €4.0 million and €10 million, and Ireland’s €50 million cap.

“They (other tax incentive schemes) quickly overtake the €1.0 million ceiling fixed by France,” the CNC commented.

The survey also concluded that the credit d’impot was the least performing in terms of the percentage of the production budget covered. In 2010, the credit d’impot accounted on average for some 8% of the production budget of the qualifying films, against an average of 22% in Canada, 18% in Belgium, 13% in Germany and 12% in Ireland. 

“It is also one of the most restrictive schemes because it is practically incompatible with other schemes and stipulates that the shoot and most the post-production take place in France,” the study also commented. 

The full report is available on the CNC website.