Tax shelter is a unique product that enables profit-making companies to invest in audio-visual and stage productions with a view to realising an attractive return.
A tax shelter subscription via BNP Paribas Fortis Film Finance is governed by the Belgian regime with reference to audio-visual and stage productions defined under Article 194ter of the Income Tax Code.
This product is intended for businesses taxed at the regular corporate tax rate, i.e. 29.58% (25% from 1 January 2020).
How does it work?
- You can subscribe at any time to invest in the next audio-visual or stage productions that will be selected by BNP Paribas Fortis Film Finance. You will be notified once BNP Paribas Fortis Film Finance has selected one or more productions to be financed by you, and the amount of subscription will be debited from your account.
- A tax shelter subscription represents a payment without reimbursement. The intention is to fund a producer’s audio-visual or stage project. In return for this payment:
- the producer undertakes to:
- pay a return after 18 months;
- meet its obligations, so that the investor is entitled to the tax advantage in the four years following its investment.
- if the conditions of the tax shelter are met, the investor may, deduct 356% (421% from 2020) from the payment, resulting in a benefit of 105.30% (105.25% from 2020) of the subscription.
- half of the increase in taxed profits for that financial year;
- an absolute limit of EUR 850,000 (EUR 1,000,000 from 2020).
The risk factors set out below are described in the prospectus (p. 11 to 14 and 23 to 30) . If you have any doubts with regard to these risk factors or the appropriateness of this investment to your financial situation, you are invited to consult a financial and/or tax specialist.
The gain and the tax benefit described here apply to businesses subject to 29.58% (25% from 2020) tax rate. The investor’s return could, however, be lower or even negative (in theory as low as -22% if the investor is taxed at a rate of 20.40%, or even -27.38% if the return is not paid by the producer).
Risks associated with the tax benefit
The tax benefit is secured immediately, but is not definitive. It is only possible if a number of conditions are respected.
Certain conditions depend on you: it is essential, for instance, that your business has sufficient taxable profits in relation to the intended investment and that it recognises the investment in the manner required by law. We therefore advise you to consult your tax adviser and/or accountant before investing.
If the tax benefit is to be definitively secured, it is necessary moreover that the producer scrupulously observes the provisions of the tax shelter legislation: i.e. it presents you with a tax certificate in the four years following your investment.
BNP Paribas Fortis Film Finance guarantees that the producer will provide you with the relevant tax certificate. We have also put in place the necessary procedures and checks to guarantee that the projects are actually achieved and generate the required spending in Belgium.
More information can be found in the prospectus.
Risks specific to an investment
Apart from the risks specific to tax shelter, the same risks apply as to any other investment. For the sake of transparency, we have set out the relevant ones below:
- The risks associated with the producers and their operational (ability to shoot the films,…) and financial capacity (ability to pay the intended interest).
- The risks associated with the issuer and its financial capacity or competitiveness. In this case: the risk that the issuer will be unable to pay the amounts due to the investors, or to meet the obligations associated with the offered guarantees, as well as the risk that the issuer will no longer be able to find attractive audio-visual and stage productions.
- Risks associated with the offer and the issuer's capacity to execute it properly. In this case, the risk that the offer will be unsuccessful, which could prevent it being finalised, if it is impossible to select a package of audio-visual and stage productions that meets the minimum conditions.
- Sector-specific risks. This relates in particular to risks that could impact the finalisation of a film. And more generally, if the Belgian audio-visual and stage productions are developing unfavourably, it might prove difficult to find productions that satisfy the issuer’s selection criteria.
- Miscellaneous risks, such as the possibility of legislative changes, making it less attractive to invest in tax shelter.
- The highest return permitted by law (subject to the risks referred to above under ‘Risks’):
- In the year of subscription, you can deduct 356% (421% from 2020) of your investment. This means that the tax benefit entirely funds your investment and that in addition, you receive a potential net fiscal return of 5.30% (5.25% from 2020) on the subscribed amount.
- After 18 months, you receive an additional remuneration based on an annual rate of Euribor 12-m average + 4.5%.
- The overall net return after 18 months is therefore at least 9.91% (as of July 2019) and is fixed at subscription.
- With the required guarantees:
- When you sign an agreement with a producer through BNP Paribas Fortis Film Finance, a BNP Paribas Fortis subsidiary, you benefit fully from the advantages offered by the tax shelter legislation.
- BNP Paribas Fortis Film Finance ensures that you receive the required tax certification within the legally established limits or that you are indemnified for all the consequences of an inadequate or missing certificate.
- Extras: you can also enjoy additional benefits, such as invitations to (avant-premieres) performances and/or DVDs.
Good to know
- Euribor 12-m average, which will be used to calculate the interest rate, is the average of the Euribor 12 months rate on the last day of each month of the calendar half-year prior to the date of payment. If the Euribor 12-m rate is negative, the applicable interest rate will be less than 4.50%.
- Given that the company needs to generate a sufficient increase in taxable profits relative to the intended amount of subscription and that there are legal requirements as to the booking of the tax shelter operation in the company's financial accounts, we strongly advise you to consult a tax adviser and/or accountant.
- A tax shelter subscription can be combined perfectly with advance tax payments.
- Any complaint regarding our products and/or services should be addressed to:
- BNP Paribas Fortis SA – Complaints Department (1QA8D)
Montagne du Parc/Warandeberg 3,
1000 Brussels; or
- The Consumer Mediation Service (Ombudsfin) via http://www.ombudsfin.be/fr/particuliers/home
- BNP Paribas Fortis SA – Complaints Department (1QA8D)