Tax Credit and Tax Shelter
Production Tax Credit
The tax credit provides an incentive for companies with little income or even making a loss. Every company, in fact, owes the treasury debt, even if it does not make a profit. In this regard, the tax credit can be an attractive option for everyone.
The provisions on the tax credit include the ability to offset tax liabilities (IRES, IRAP, IRPEF, VAT, social security and insurance) with the credit accrued as a result of an investment in the film industry. The recipients are production companies and film distribution, cinema operators, production companies and post-production executive (technical industries), as well as businesses outside the audiovisual industry associated profit-sharing of a movie from the film producer.
Tax shelters are a method of reducing taxable income, cutting the revenue receipts. In the new Italian law, in accordance to this tax measure, a maximum default budget is introduced. Moreover, this is proportionate to the cost of production of a funded film with regard to the size of the loan.
The provisions on tax shelters allow the taxation of business profits with the ability to benefit from a tax shelter, for the portion of profits invested in the production and film distribution. Tax credits and tax shelters are not cumulative in relation to the same film work. Actually can benefit from tax relief the film production companies (Decree of 7 May 2009 "tax shelter producers"). The benefit is required in the income tax return for the financial year which refer to the profits accrued, and it is on condition that the clearance projection in public (known as "censor") film's subject matter of "tax shelter", is required within 18 months from the date of approval of the budget which refer invested profits.
link: www.cinema.beniculturali.it/direzionegenerale/57/tax-shelter (italian)
Tax Credit and Tax Shelter: New Ways of Financing Italian Cinema: link (english)