Belgium

Tax Shelter regime for audio-visual work 

Creating a win win situation for your company and the Belgian audiovisual industry

 

A decade ago the Belgian government introduced a special tax regime in order to encourage the production of Belgian audiovisual work and films. The regime commonly referred to as the Belgian ‘tax shelter’ gives a tax exemption to companies or permanent establishments that invest in the production of a Belgian audiovisual work. Up to today over M€ 450 has already been invested via the tax shelter in the Belgian audiovisual industry.    

The investors are entitled to deduct 150% of their investment from their taxable basis. Hence, the investor may recover 51% (150% x 33,99%), of the investment directly via the reduction on its corporate income tax. In other words, the tax shelter gives the investors the opportunity to reduce its corporate tax liability, resulting in significantly tax savings and cash flow advantages. Furhter, it gives opportunity to make a solid return on investment. In practice ROI between 5% and 10% are not excluded.  


Please note that the regime will undergo some changes as of 2015. In a nutshell the tax exemption will further increase to 310% of the invested sum, the investor will no longer be benefiting from the earnings of the production but will be entitled to receive an interest remuneration on the total of the invested sum. As a conclusion the adapted regime will further strengthen the investor’s position and will secure the tax shelter’s position as an interesting and advantageous investment instrument.


Projection of investment scheme:

 

*  Current framework  Future framework
 

 Put option

 

 Profit participation 

 

 
 TS-investment  (100)  (100)  (48,39)
 Tax advantage TS-investment  51  51  51
 Gross-interest fee  4,09  4,09  3,66
 Tax on interest fee  (1,39)  (1,39)  (1,24)
 Repayment loan  40  40  N/A
 Put-option price  12,23  N/A  N/A
 Tax on put-option price  0  N/A  N/A
 Profit participation  N/A  25  N/A
 Tax on profit participation  N/A  (8,5)  N/A
 Total net revenue  5,93  10,2  5,03

 

* Based on an investment over an 18 months period

 

 

Your advantages

 

  • Reduction of the corporate income tax liability with circa 51% of the invested sum.
  • Interesting return on the invested sum. 
  • Cash planning tool (current framework): tax reduction available as of the moment the investment agreement is concluded (notwithstanding the invested sum are paid).
  • Marketing instrument: investors are mentioned on the endtitles.    

 

How can KPMG assist you
As investors are faced with a challenging legal framework and a variety of investment companies we believe that a guidance in evaluating and concluding a tax shelter investment and the implementation of such an investment afterwards , is crucial.

 

KPMG consults on a day to day basis on the application of this interesting measure, and can therefore help you in your investment process.

 

 

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Thomas Zwaenepoel

Thomas Zwaenepoel

Partner

+32 (0)27083861