Tax Shelter, essential financial support for Belgian culture and a great tax optimisation opportunity for our companies.
Tax Shelter is a powerful tax optimisation tool that benefits two beneficiaries:
1. It allows Belgian companies in a profitable situation to reduce their taxes, while benefiting from a fixed return on investment;
2. It finances the production of audiovisual works, the performing arts and, more recently, video games in Belgium and, to a lesser extent, in Europe.
It is basically a tax incentive designed to encourage the production of audiovisual and performing arts works, based on Article 194 of the Income Tax Code (CIR92).
Tax exemption of 421%.
The idea behind Tax Shelter is to reduce the investor's tax basis by an amount equivalent to 421% of their investment. For example, for every €100 invested, the investor will claim €421 in tax exemption, giving a tax reduction of €105.25 (with a corporate tax rate of 25%).
14.43% return
On the investor side, in addition to the tax exemption, the Tax Shelter law guarantees the investor a financial premium, linked to the 12-month Euribor rate, equivalent to 9.18% net for the 2nd half of 2024. Added to the 5.25% tax benefit, this gives a total net return on investment of 14.43%.
Maximum producer expenditure in Belgium
On the producer side, to benefit from the maximum Tax Shelter financing, the amounts invested must be spent on Belgian production expenses (min. 61.65%), such as salaries, shooting expenses, costumes, sets, special effects and post-production, etc.
The intermediary's role
Companies that invest in Tax Shelter usually do so via an intermediary company approved by the FPS Finance, such as Casa Kafka Pictures, a subsidiary of RTBF. Isabelle Molhant, its CEO, explains the role of the intermediary:
‘We act as an intermediary between investors and producers. On the one hand, we support the investors and their accountants throughout the entire transaction cycle, and on the other, we select the producers and the films and monitor their production from a financial point of view. Since 2010 we have financed films by the Dardenne brothers, Lukas Dhont's ‘Girl’ and ‘Close’, Adil El Arbi and Bilall Fallah's ‘Patser’ (‘Gangsta’ in English), RTBF series such as ‘Ennemi public’, ‘1985’ and ‘Baraki’, concerts by the Belgian National Orchestra (BOZAR) and the Antwerp Symphony Orchestra, TTO shows, etc. Since our creation in 2005, we have financed over 1,000 works for more than 100 producers. ‘
Eligibility conditions for investors
The investor must be a company (legal entity) resident in Belgium.
Generally speaking, to benefit from this tax incentive, the company must be subject to a corporate tax rate at 25%, generate a profit and its maximum Tax Shelter investment must not exceed the following 2 limits:
- 50% of its reserved profits after tax and/or;
- 237,500 euros, equivalent to a tax exemption of 1 million euros.
Tax Shelter as a complement to other tax mechanisms
Tax Shelter can easily be combined with other tax mechanisms. ‘For example, the Tax Shelter is a real alternative to advance payments, with the main difference being that the funds do not go into the government purse but directly finance Belgian culture!’ says Bruno Carbonnelle, COO of Casa Kafka Pictures. He adds: ‘Contrary to popular belief, it is in no way in opposition to the distribution of dividends or allocation to liquidation reserves; it can increase the total value, but with a time delay.'
Conclusion
In conclusion, the Tax Shelter has at least three advantages for businesses:
1) It reduces the tax base by 421% of the investment,
2) it offers a net return of 14.43%, and
3) it complements the ESG effort because it contributes to the development of the Belgian cultural sector, a vector for the creation of cultural capital, the strengthening of creativity and social cohesion.
Disclaimer
A Tax Shelter investment involves risks. Please consult our prospectus before making any investment decision.
For more information, we invite you to attend our next conference on 12 September
COO - Casa Kafka Pictures
