Tax Credit Production: new decrees reinforce and simplify access to fiscal incentives


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The number of active sets in Italy has boomed: the country’s film and audiovisual industry is demonstrating great resilience in the face of the current difficulties and, given the huge request for content from the streaming channels, many domestic and international productions are opting to shoot in the peninsula. This is thanks to rigid anti-contagion protocols and to the financial measures enacted to bolster the sector which, to date, amount to approximately €300 million in support along the entire production line. Good news comes from the latest Financial Law which increased the Fondo ordinario per il cinema e l’audiovisivo (Ordinary Fund for Cinema and Audiovisual) for 2021 to €640 million from a base of €400 million.

The most robust and incisive tool is the tax credit, whose original budget for film and audiovisual productions, including video games, (the so-called “Internal Tax Credit”) amounted to €313 million (to which further resources, deriving from residuals carried over from the previous year, will be added).

The Decree n. 70 of 4 February 2021 issued by the Ministry of Culture in concert with the Ministry of the Economy introduced important new aspects for fiscal assistance in support of audiovisual production. The measure – which enacts the 2021 Legge di Bilancio (Budget Law) – renders the increase in tax brackets, applied as a temporary measure for the period of emergency, permanent: with a rise for films from 30% to 40%, while the approach to audiovisual works has been simplified with a base bracket of 30% which can rise to 40% in well-defined cases (there were four separate brackets in the previous system).

There is also a new approach to the maximum annual credit limits: previously determined by business type, these now refer to the work and amount to €9 million (there is no distinction between types of product) with the possibility of increasing to €18million in the presence of resources from international countries for at least  30% of the overall cost.

A tailored tax credit is also being introduced for research and training content, which includes feature-length documentaries costing less than €1.5 million and short films costing less than €200k. Music videos will also be eligible for the fiscal incentives.

Furthermore, the new decree outlines the end of the procedure for the multi-year credit use plan which permitted the advance booking of resources, reducing the amount available for productions in the following years. Requests for tax credit may be made until the amount budgeted for the ongoing year is finished. The eligible cost for tax credit includes post-production expenses carried out in Italy.

A totally new element derives from the industry’s need to adapt to the present situation and the consequent investment required to meet expenses deriving from anti Covid-19 health protocols for which there is a 100% tax credit, up to €400k for each work. In the eventuality that a production suffers an irreversible interruption, deriving solely from the pandemic, the tax credit will still be recognised on the basis of the eligible costs borne and paid until that moment.

Lastly, with another decree, the Ministry has reformed the management of the tax credit relative (amid the others) to attracting investment in Italy’s film and audiovisual sector (the so-called “Foreign or international tax credit” for which €50 million has been earmarked for 2021) including an increased maximum percentage of assignable tax credit, here too from 30% to 40%, and the requirement of having shot (or, in the case of animation, worked) at least one day in Italy to access the credit.

(Italy for Movies, edited by Maria Giuseppina Troccoli, Bruno Zambardino, Monica Sardelli).