State Tax
Incentive Regimes For Film Production
Florida
There
are special tax exemptions that have helped Florida
become the third largest motion picture and television
production center in the United States.
Tax
incentives include:
- Effective
January 1, 2001, no tax on the sale or lease
of motion picture, television, and sound-recording
equipment. This exemption takes place at the
“Point of Sale”. For complete information
on Florida's Certificate of Exemption go to
www.filminflorida.com.
- No
tax on artistic or copyright material on master
tapes, master films, master records and master
videotapes. Transactions involving masters are
taxed only on the value of the blank film, tape
or other tangible personal property. The value
of all the major cost components of making a
master, such as artistic services, processing,
copyrights and royalties, is excluded from taxation
when the master is sold or leased;
- No
tax on the rent or lease of real property used
as an integral part of a motion picture production.
Renting studios, sound stages, lots, buildings
or any other real estate is exempt. This exemption
applies to small, independent operations and
to major studio facilities.
- No
tax on labor to produce a film, commercial or
sound recording made for a company’s own
use;
- No
tax on the lease of real property to a person
providing food and drink concessionaire services
within the premises of a movie theater.
- Qualified
Target Industry individual tax refunds of $3,000
per new, new high-wage motion picture, sound
recording and reproducing studio created in
Florida ($6,000 in a rural county or enterprise
zone) are available with additional bonuses
for extremely high-wage jobs. Only businesses
serving multi-state and/or international markets
are targeted.
Palm
Beach County has further incentives:
-
The Office of Economic
Development has created a fund making up to
$150,000 available to production companies and
facilities that relocate to Palm Beach County.
- Palm
Beach County Feature Film Incentive Grant. The
Board of County Commissioners and the Tourist
Development Council of Palm Beach County have
earmarked $25,000 to draw feature film and television
projects to the area. Eligible projects must
have a minimum budget of $5,000,000, utilize
up to 2,500 hotel rooms in the County, and employ
local crewmembers.
Under
the auspices of the Palm Beach County Film & Television
Incentive Grant Program, county staff review evaluate
applications against the criteria set forth below,
and per County staff review, added weight may
be given to any of the criteria based upon the
nature of a particular project proposal, its benefit
to the economic base of Palm Beach County, and
the enhancement of the Film & Television Industry.
1.
The locations of existing film, television or
multimedia related businesses in Palm Beach County
relative to the site of the relocation or expansion
project.
2.
The relocation or expansion project must create
a minimum of 25 full-time jobs in Palm Beach County.
One (1) new full-time job equates to 2,080 hours.
New positions will be filled by Palm Beach County
residents or individuals who will relocate to
this County and work as a full-time employee on
a film, television or multimedia production.
3.
The minimum average annual salary requirement
for the new jobs is $37,503, excluding benefits.
4.
The program allows an applicant to create and
fill the required number of new jobs within 12
to 36 months of the commencement date of the grant
agreement. The total number of months to be required
for job creation which will be identified in the
agreement will depend upon the job hiring timetable
of a specific project.
5.
The construction / expansion / relocation of the
physical infrastructure will be completed within
12 months of agreement’s approval or as otherwise
specified in the agreement.
6.
Applicants must invest at least $1,000,000 in
a real estate purchase or lease or the development
of space to be used as a production facility.
Unless otherwise agreed upon, the minimum required
space for a facility should be no less than 7,500
square feet, with the overall land area no less
than 10,000 square feet.
The Economic Development Office (EDO) may apply
criteria to a particular application that differs
from the standard criteria set forth above in
order to ensure compliance with the goals and
mandates of the FTI Grant Program.
With
regard to grant limits, the base award per application
will be from $500 to $2,000 per job created. The
EDO may recommend deviations from this base award
amount as circumstances warrant.
County
Administration will determine an appropriate award
per job for the application based on the merits
of the application, including the project’s anticipated
positive economic impact on Palm Beach County.
The
maximum award per application is $200,000, with
the potential for a larger award upon the EDO
supporting and recommending such; and ultimately,
County Administration issuing a letter of intent
for a larger award. The minimum award per application
is $12,500.
California
The
$45m Film California First Program, initiated
by then Governor Gray Davis, was approved by the
Legislature in June 2000 and commenced on January
1, 2001. FCF Program increased California's competitive
edge in attracting and retaining film projects.
Qualified Production Companies realized cost savings
through the Program's various reimbursement categories
when filming on public property in California.
However,
Film California First is currently not funded.
Incentives now offered by the Californian authorities
include:
Financial Incentive
The
State Theatrical Arts Resources (STAR) Partnership
is a unique program that offers filmmakers access
to unused, distinctive State-owned properties
(e.g., health facilities, vacant office structures,
prisons, etc.) for a nominal fee or at no charge,
thus helping production companies to substantially
cut below-the-line expenses. Permits for STAR
properties are also obtained through the CFC.
Tax
Incentives
No
State hotel tax on occupancy. Most cities or counties
that impose a local hotel tax have a tax exemption
for occupancies in excess of 30 days. Five percent
sales tax exemption on the purchase or lease of
post-production equipment for qualified persons.
Services Provided
- Free
permits for California State properties.
- No
location fees for California State properties.
- One-stop
film office for California State properties.
- On
site location library and web-based location
finder for sites throughout California.
- On
site California Highway Patrol (CHP) Film Liaison
available to assist with filming on State freeways
and highways. This liaison also arranges CHP
officers to monitor film shoots.
- On
site California State Fire Marshal available
to provide advice and approval for pyrotechnics
and other special effect permits for State properties.
- Coordination
with more than 55 in-state film commissions.
- Production
and troubleshooting assistance.
Illinois
In
August, 2003, Illinois Governor Rod Blagojevich
signed into law a package of tax breaks designed
to lure movie and television companies back to
the state following years of decline in the number
of productions taking place there.
As
previously mentioned, many states across the US
have suffered at the hands of 'runaway productions',
whereby producers of big-budget movies have chosen
to locate in countries with favourable tax regimes
for such projects, such as Australia and Canada.
"In the old days, movies were filmed in Illinois
all of the time," Blagojevich lamented at the
time. "Nowadays, movies named 'Chicago' are filmed
in Toronto."
Illustrating
the extent to which runaway production has affected
states like Illinois, Brenda Sexton of the Illinois
Film Office estimated recently that the state
has forgone about $100 million per year in film
and television production revenue in recent years.
Blagojevich also points out that since 2001, 18
movies which were 'set' in Chicago were actually
shot on location in Canada.
Meanwhile,
Bob Teitel and George Tillman, producers of Barbershop
and Barbershop 2 welcomed the move, although they
warned that Canada in likely to remain very attractive
to US film-makers.
"It's
so competitive out there. It's so competitive
in Canada, with the dollar. Anything that helps
brings more productions here is a step in the
right direction," said Teitel.
In
May, 2006, the Illinois Film Office announced
an expansion of its film production tax credit
program. The new incentive took effect immediately
and applies to productions shot after May 1, 2006.
While the previous incentive offered a tax credit
equal to 25 percent of qualifying Illinois labor
costs, the new tax credit offers an across-the-board
credit equal to 20 percent of all production costs,
including post-production.
Louisiana
Since
2002, Louisiana has offered three sets of incentives
for film production.
SALES
AND USE TAX EXCLUSION
This
exclusion, from state sales and use tax (4%),
runs until January 1, 2007. The production company
will be granted the "exclusion" if it
reports anticipated expenditures of $250,000 or
more from a checking account in a financial institution
in Louisiana in connection with filming or production
of one or more nationally distributed motion pictures,
videos, television series, or commercials in the
state of Louisiana within any consecutive 12-month
period.
EMPLOYMENT / LABOR TAX CREDIT
The
law provides that until July 1, 2006, a motion
picture production company is entitled to a tax
credit for the employment of La. residents in
connection with production of a nationally distributed
motion picture, video, television series, or commercial
made in Louisiana.
The
credit is equal to 10% of the total aggregate
payroll for residents employed in connection with
such production when total production costs in
Louisiana equal or exceed $300,000 but less than
$1 million during the taxable year. The credit
shall be equal to 20% of the total aggregate payroll
for residents employed in connection with such
production when total production costs in Louisiana
equal or exceed $1 million during the taxable
year.
The
term "total aggregate payroll" does
not include the salary of any employee whose salary
is equal to or greater than $1 million.
The
credit may be applied to any income tax or corporation
franchise tax liability applicable to the motion
picture production company. If the motion picture
production company is an entity not subject to
income or franchise tax, the credit shall flow
through its partners or members as follows:
- Corporate
partners or members shall claim their share
of the credit on their corporation income or
corporation franchise tax returns.
-
Individual partners or members shall claim their
share on their individual income tax returns.
-
Partners or members that are estates or trusts
shall claim their share of the credit on their
fiduciary income tax returns.
- Any
unused credit may be carried forward no more
than 10 years from the date the credit was earned.
INVESTOR
TAX CREDIT
The
law grants a tax credit against state income tax
for taxpayers domiciled and headquartered in Louisiana.The
objective of this tax credit is to attract private
investment for the production of nationally distributed
feature length films, videos, television programs,
or commercials made in Louisiana, in whole or
in part for theatrical or television viewing or
as a television pilot.
The
investor earns the tax credit at the time of such
investment. If the total base investment is greater
than $300,000 and less or equal to $8 million
dollars, each taxpayer is allowed a tax credit
of 10% of the actual investment made by that taxpayer.
If
the total base investment is greater than $8 million
dollars, each taxpayer shall be allowed a tax
credit of 15% of the investment made by that taxpayer.
In
the event that the entire credit cannot be used
in the year earned, any remaining credit may be
carried forward and applied against income tax
liabilities for the subsequent 10 years.
The
Louisiana Investor Tax Credit is set to be amended
in January 2006. The proposed amendments to the
current legislation, which have been signed by
the governor, can be found here.
New
Mexico
The State of New Mexico offers film production
companies two separate tax incentives:
-
A gross receipts tax deduction : also known
as the "NTTC" program, this is a deduction
taken at the point of sale on many production
costs, or
-
A 15% film production
tax rebate on eligible direct production costs
against the filmmaker's New Mexico income tax.
The
Production Tax Rebate
New
Mexico offers a 15% tax rebate program and an
additional 5% tax rebate program (totaling a 20%
tax rebate) on production expenditures that are
subject to taxation by the State of New Mexico.
This
is a refund (not a credit), with no brokering
required and no cap
Requirements
for 15% tax rebate are that:
- The
script cannot be obscene in nature or contain
elements that would preclude minors from viewing
without accompanying parent or guardian.
- The
film shall contain an acknowlegment that the
production was filmed in the State of New Mexico.
- The
production shall agree to pay all obligations
the film production company has incurred in
New Mexico.
- The
production shall agree to publish, at completion
of principal photography, a notice at least
once a week, for three consecutive weeks, in
local newspapers in regions where filming has
taken place to notify the public of the need
to file creditor claims against the film production
company by a specified date.
- The
production shall agree that outstanding obligations
are not waived should a creditor fail to file
by the specified date.
- The
production shall agree to delay filing of a
claim for the Production Tax Rebate until the
New Mexico Film Office delivers written notification
to the Taxation and Revenue Department that
the film production company has fulfilled all
requirements for the credit.
- The
production shall agree to enter into a contract
with the New Mexico Film Office (Production
Tax Credit Agreement), accepting the terms of
the above.
Requirement
for additional 5% tax rebate are that 60% of the
Below-the-line payroll must be allocated to New
Mexico residents.
Qualifying
enterprises are: Feature films, television, national
and regional commercials, and documentaries. A
"film" is defined as a single medium or multi-media
program, including national advertising messages,
fixed on film, videotape, computer disc, laser
disc, or other delivery medium, that can be viewed
or reproduced and that is exhibited in theaters
or by individual television stations, groups of
stations, networks, cable television stations
or other means or licensed for home viewing.
The
elements of production which qualify for the tax
rebate are:
- Cost
of a story and scenario to be used for a film
wages or salaries of talent, management, and
labor of New Mexico residents.
- Cost
of set construction and operations, wardrobe,
accessories, and related services costs of photography,
sound synchronization, lighting, and related
services.
- Costs
of editing and related services rental of facilities
and equipment (including location fees) leasing
of vehicles, food, and lodging airfare purchased
through a New Mexico-based travel agency, or
company insurance and bonding purchased through
a New Mexico-based insurance agent.
- Any
other direct costs
The
NTTC Program
Nontaxable
Transaction Certificates (NTTCs) are used primarily
for commercials, PSAs and documentaries).
If
a filmmaker chooses to use the Nontaxable Transaction
Certificates (NTTCs) on a given expenditure, the
same expenditure may not be counted toward the
15% and 5% Tax Rebate Programs.
The
State of New Mexico charges a gross receipts tax,
or sales tax, at the point of sale. As an incentive,
the state issues the company in question with
Type 16 Nontaxable Transaction Certificates (NTTCs),
which work much like grocery-store coupons.
A
certificate is presented at the point of sale,
and no gross receipts tax is charged.
The
program is used primarily by producers of local,
regional, and national advertisements.
Aspects
of the production which qualify for NTTCs are:
- The
cost of a story and scenario to be used for
a film;
- Salaries
of talent, management and labor; including payments
to personal services corporations with respect
to the services of qualified performing artists,
as determined under Section 62b(a)(A) of the
Internal Revenue Code of 1986;
- Cost
of the construction and operations, wardrobe,
accessories, and related services;
- Costs
of sound synchronization, lighting, and related
services;
- Costs
of editing and related services;
- Rental
of facilities and equipment (including location
fees); and
- Other
direct costs of producing the film, not including
lodging, rental of vehicles, or catering
New
York
New
York City’s film and television production industry
is expanding rapidly as a result of new tax incentives
designed to attract big production companies to
both the city and the state, NYC Mayor, Michael
Bloomberg announced in March, 2005.
Speaking
on the set of the new Fox Entertainment series
‘Jonny Zero,’ Bloomberg stated that the five pilots
currently planned to be made in New York will
bring more than $15 million into the city’s coffers.
“Television
and film production in New York City is increasing,
largely due to innovative tools like our ‘Made
in New York Incentive Program’, which is showing
film and television organizations that we want
to make it easier and more profitable for them
to shoot here.”
Signed
into law in September of 2004 by Governor George
E. Pataki, the ‘Empire State Film Production Credit
Program’ provides tax incentives to feature films
and episodic television shows that shoot the majority
of their filming on qualified soundstages across
New York State.
The
Empire State Film Production Credit (New York
State) program provides a refundable 10% tax credit
for qualified feature films, episodic television,
pilots, and television movies/miniseries.
The
Made In New York (New York City) program provides
an additional 5% credit and was signed into law
by Mayor Michael R. Bloomberg on January 3, 2005.
Both programs are currently scheduled to expire
in 2011.
The
incentive applies to qualified production costs
for work incurred in New York State and/or City,
and productions must qualify by being based in
New York State and/or City. New York City consists
of the five boroughs of Bronx, Queens, Brooklyn,
Staten Island and Manhattan.
The
two programs (State and City) are similar and
have similar qualifying thresholds. Projects and
costs which qualify for the New York City credit
will also be eligible for the New York State program.
However, work incurred in New York State but outside
the City is eligible only for the State 10% credit.
For
a feature film or television project to be eligible
for the New York State credit, the production
must:
-
Shoot on a set, on a stage, at a qualified production
facility in New York State; and
- Complete
at least 75% of the total facility related expenses
at a qualified facility.
These
productions will qualify for up a 10% state tax
credit for the work done at the facility. If the
facility is within New York City, these productions
will also qualify for the additional 5% tax credit
from the New York City program.
For
location work, post-production, and costs of other
work done in New York outside the facility to
be eligible, either:
-
At least 75% of the location shooting days must
be in New York State; or
- The
production must spend at least $3 million on
work incurred at the qualified facility.
If
the facility is in New York City and 75% of location
days are done within New York City, the production
will also qualify for the additional 5% tax credit
from the New York City program.
According
to Mayor Bloomberg, New York City’s production
industry employs 100,000 New Yorkers and generates
$5 billion for the City annually.
In
April, 2005, the city of New York said it was
hoping to attract a slice of the booming Chinese
film industry after signing a deal with a Hong
Kong-based production company. The agreement with
Salon films marks the first such deal between
New York's film promotion agency and a Chinese
production company, and could result in a Hong
Kong movie being shot in the city later in the
year.
Virginia
There
is a Sales and Use Tax Exemption applying to many
film production costs, including:
-
the lease, rental, license, sale, other transfer,
or use of any audio or video tape, film or other
audiovisual work where the transferee or user
acquires or has acquired the work for the purpose
of licensing, distributing, broadcasting, commercially
exhibiting or reproducing the work or using
or incorporating the work into another such
work.
-
the provision of production services or fabrication
in connection with the production of any portion
of such work, including, but not limited to,
script writing, photography, sound, musical
composition, special effects, animation, adaptation,
dubbing, mixing, editing, cutting, and provision
of production facilities or equipment.
- the
transfer or use of tangible personal property,
including, but not limited to, scripts, musical
scores, storyboards, art work, film, tapes and
other media incidental to the performance of
such services or fabrication.
-
equipment and parts and accessories thereto
used or to be used in the production of such
audiovisual works.
Form
ST-20A - Sales and Use Tax Certificate of Exemption
(For use by production companies, program producers,
radio, television and cable TV companies, and
other entities engaged in the production and creation
of exempt audiovisual works and the licensing,
distributing, and broadcasting of the same) is
available from the Virginia Department of Taxation,
the Virginia Film Office or the Film Office website:
at http://www.film.virginia.org.
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