Government will have to get approval from European Commission because any relief will be regarded as state aid
Usually cheaper to produce, the ‘unscripted’ sector includes reality TV shows such as Love Island, chat shows, and other light-entertainment programmes that are often filmed before a live studio audience. The Government has said it aims to introduce a new tax credit for the sector in this year’s Budget.
This would be similar to the Section 481 scheme that is available to the film industry, and which allows producers to claim back 32pc of eligible expenditure on productions.
The credit for the unscripted sector would be an innovative measure, the report from the high-level tax strategy group says, with only two other schemes in Europe, operated by Malta and Cyprus.
Officials have been talking to stakeholders in the sector as part of their research, including both public bodies and private sector TV companies. They say it is clear from the research that there is an appetite in the sector for a targeted tax relief for unscripted productions.
“If introduced, such a relief could have the potential to support additional employment in the sector and increase demand for studio space,” the report says. “Based on figures available to the Department of Finance, estimates indicate industry spend in the unscripted sector in Ireland is in the region of €90m per annum. It has been suggested by stakeholders that this could increase to circa €300m per annum with incentives in place.”
In order to introduce the tax credit, the Government will have to get approval from the European Commission, because it will be regarded as state aid. The legal case that Ireland would make is that the incentive is designed to promote Irish and European culture.
This would mean bringing in a cultural test to ensure public funds are being spent on projects of merit, the paper says. There is a similar test for the Section 481 film tax credit, and the digital games tax credit.
Decisions on the nature and value of the relief have still to be taken, the officials say, and also on how it will be claimed. There will also have to be thresholds set, as with the film credit, where the minimum amount that must be spent on the production is €250,000, and with the digital games credit, where the minimum spend requirement is €100,000.
“It is also necessary to consider the introduction of a cap on eligible expenditure, to provide for an element of control over the cost of the credit from an exchequer perspective,” the report said.
The cap on the film credit is €125m, and for digital games is €25m.
Given the amount of work that still has to be done, it is not clear if the tax credit will be ready in time for announcement by Finance Minister Jack Chambers in the earlier-than-expected Budget on October 1.
In an interview last January with the Business Post after he met executives from Disney, HBO and Warner Brothers during a visit to the west coast of America, then Finance Minister Michael McGrath repeated the Government’s commitment to developing a tax relief measure for the unscripted sector following consultation with the European Commission.
“I am very confident we can build on the success that we’ve had in the creative sector in recent years and win exciting new investments in the period ahead,” Mr McGrath said.
