Tax Credit for Entrepreneurs of Live Shows: If you are putting on a show in France, you’ll be happy to learn that certain expenses are eligible for tax credit.
Entrepreneurs of live shows are now able to profit from a new tax credit. This article explains the necessary conditions and methods for calculating this tax credit and provides the information you need to stay ahead in the world of the arts.
Who is entitled to this? If you; operate in accord with ‘Article L7122-2’, your activity is subject to tax on businesses, you are responsible for a show or you support the costs of a show, then you can claim tax credit as an entrepreneur. ‘Article L7122-2’ refers to the operational activities of venues, the production or the distribution of shows; whether alone or under contract with other entrepreneurs of the same show – regardless of the management style (public, private, profit, non-profit).
The expenses that are eligible for the tax credit concern the creation and operation of a show as well as the digital features. These shows can be musicals or a variety of other genres but the expenses must fulfil certain conditions. The show must be orchestrated by an established business in either France, another member state of the EU, Iceland, Lichtenstein or Norway. On top of this, the entrepreneur must carry out their show in such a way that the majority of the creation costs are engaged in France.
What fees correspond to these expenses? There are many and the show must be directly accountable for these expenses. Here is a comprehensive list:
- The fees (salaries and social charges) of permanent staff of the staff directly concerned with the show (artistic directors, musical directors, communication directors, artistic collaborators…) and of the directors in the overhead threshold of 50 000€ per year.
- The fees of non-permanent staff of artists and technicians in the threshold of 5 times the amount of conventional minimum salary and wages, and copyrights, expenses and benefits paid to individuals or legal entities that contributed directly to the show (graphic designers, costume designers, makeup artists, light designers …)
- Royalties paid to the collection and distribution of copyright businesses
- Rehearsal and performance room rental fees
- Equipment rental fees
- Depreciation fees
- Cancellation or material insurance fees
- The maintenance, equipment repair, governance, transportation, catering and accommodation (maximum 270€ per night) fees
- The necessary fees for the promotion of the show (use of promotional materials, website creation…)
As for the digital expenses, a smaller but equally relevant list forms. Including:
- Copyright acquisition fees
- Capture fees (sound, image, light)
- Acquisition of pre-existing images fees
- Technical design fees
- Post-production fees (assembly costs, calibration, mixing, encoding and mastering)
Everything considered, the rate of the tax credit is key; it is equal to 15% of the total amount of expenses.
However, it is 30% for businesses who employ fewer than 250 people and in which the annual income is less than 50 000 000€ or the annual balance sheet total is less than 43 000 000€ – SMEs. Furthermore, the amount of eligible expenses for tax credit is limited to 500 000€ per show. Yet the tax credit is capped at 750 000€ per company, per year.
For example, consider a business which commits 600 000€ of eligible expenses to tax credit for a show. The tax credit for this show will be 75 000€ (500 000€ x 15%). If this business is an SME, in the community sense, the tax credit will be 150 000€ (500 000 € x 30 %).
Nevertheless, in order to benefit from this new development there is an important process to follow. The Ministry of Culture must be informed before anything can be verified. The entrepreneur must send an application to them in order to obtain a provisional accreditation. Only then can the credit be approved following consultation by an expert committee. Crucially, the tax credit that may be received would actually have to be repaid by the entrepreneur in the case that a final approval was not granted within 42 months of application submission.
A final and important aspect to note is that the tax credit can only be deducted from the income tax for the year in which the expenses were incurred. If one was to incur eligible expenses in 2016, their tax credit would be deducted from their corporate income tax for the year of 2016. An entrepreneur could truly reap the rewards of their lower annual income if they use this information to optimise their business.
If you are currently an entrepreneur looking to put on a show, it is important to ensure substantial understanding of all relevant information, facts and procedures. Here at Maupard, we would be more than happy to advise you on this matter and to allow you to make the most of these opportunities.
Do not hesitate to contact us by telephone on +33 (0) 1 53 93 94 20 or by e-mail to [email protected], so we can work out the needs of your business. Our team of experts is here to answer any questions you may have.