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Film industry boost with increased relief of up to 80% on cost of movies

By Harry McGee, Political Editor
IRISH film making was given a massive boost yesterday when Finance Minister Brian Cowen announced a generous expansion of tax reliefs for the industry.

Mr Cowen included the new reliefs for investments in film production in the Finance Bill 2006, which was published yesterday.

He announced measures that will allow tax relief to be claimed for 80% of expenditure of films, up from the existing levels of 55% or 66% (depending on the film budget).

And in another significant development, he has greatly increased the ceiling of the qualifying budget of a film from €15 million to €35m.

However, Mr Cowen pointed out that what he described as "substantially improved terms" would be subject to European Commission approval. Under EU competition laws, these new reliefs will be deemed as state aid, and therefore must be approved by the commission.

Ireland was one of the first EU countries to introduce tax relief for film makers. However, in recent years, many other European countries, including Britain, have introduced comparable schemes that have enticed production companies away from Ireland.

While the Irish film industry remains strong, many of the recent productions have been independent films on smaller budgets - including Neil Jordan’s Breakfast on Pluto and a film of Paul Mercier’s play about a Dublin soccer team, Studs.

The improved reliefs will put Ireland in a stronger position to attract big-budget movies like Braveheart.

The improved S481 reliefs come two years after former Finance Minister Charlie McCreevy toyed with the idea of scrapping the relief altogether. He relented in the 2003 Budget after intensive lobbying from the film industry and Arts Minister John O’Donoghue.

The scheme was one of a dozen - most of them property-based, but which included the controversial stallion tax exemption - which have been the subject of review by the department over the past two years.

Yesterday, Mr Cowen said he would be publishing all the reviews early next week, in advance of the Dáil debate on the second state of the bill.

"The reviews have provided a valuable source of analytical evidence on which to base policy decisions in the area of tax reliefs," he said.