The Tax Rebate for International Production (the T.R.I.P.)
How does the incentive work?
What is it?
The Tax Rebate for International productions (TRIP) supports foreign companies whose projects are completely or partly made in France. To be eligible, projects must include elements related to French culture, heritage, or territory. Eligibility is based on a Cultural Test, which assesses the relativity of the story, locations, characters, sources, landmarks, creators, crew and technical hubs.
For animated production, there is a dedicated Cultural Test, acknowledging the singularities of the genre (download the full guide).
The amount allocated comprises 20% of the film expenses incurred in France, and caps at € 4 million per project (USD $5.4 milllion as of March 2010). The TRIP is given to the French company managing the production in France on behalf of the foreign producer.
1. Eligible companies
To file a TRIP application, a company must meet the following criteria:
Be subject to corporate income tax in France.
Act as line producer for the sequences produced in France, and enter a line production agreement with the foreign producer.
The line production company is defined as “the company, in compliance with a contract with a foreign production company, that supplies the artistic and technical means for making the TV-film or movie concerned, manages the material operations for making the project and monitors its proper execution”.
There is no restriction to the capital mix of the applicant or its main business. The company can thus specialize in line production, or in film and TV production with executive production as its main activity; it can be an animation or VFX studio, a subsidiary of the foreign producer, an ad hoc created company, etc.
For live action productions, a directory of French active line production companies may be consulted here.
For animation productions, a list of French animation studios may be obtained from the French film commission, Film France (www.filmfrance.net). A DVD with the demo reels of 10 of the major studios is available on request at film@filmfrance.net.
2. Eligible productions expenses
1. Live action productions
Eligible productions
To be eligible to the TRIP, a live action film or TV project must meet all of the following criteria:
The project must be a live action film or TV movie (that may function alone or as parts of a series);
Live action documentaries or films used for advertising or corporate purposes are not eligible.
The project must not receive any other financial support for production from the CNC;
The project may not be pornographic or promote violence;
The project must spend a minimum of 1 million Euros on eligible expenses in France; For TV series, it is possible to aggregate the costs of several episodes in order to reach the 1 Million Euro threshold.
Live action projects must shoot at least 5 days in France;
Live action projects must obtain at least 18 points on the rating scale of the Cultural Test, including 7 points in the “dramatic content” portion.
Live action projects may apply to the animation Cultural Test if they include a strong portion of VFX shots (see Part 2 “Animation productions).
Eligible expenses
To be eligible, the project must ensure that the expenses mentioned below are incurred by the French line producer who submits the application to the CNC.
These expenses must directly contribute to the production needs.
The maximum tax rebate is Euro 4 million. It comprises 20% of the following expenses, excluding tax:
Wages and compensation for French and European authors, actors, and crew members;
Fringes.
For actors, the compensation amount considered for the tax rebate is limited to the minimum compensation amount outlined in the collective bargaining agreements of the movie industry.
When the line production company employs production personnel on a permanent basis, eligible costs will only include the wages, payroll taxes and benefits that incur when the concerning personnel was employed for production. This includes the following:
All technical expenses (rentals and purchases);
Transportation, including international transport of materials and crew (provided that the transportation “is not of a extravagant nature”);
Catering expenses that are incurred for the needs of the production;
Expenses relating to a shorter shoot outside of France that utilize the same crew and material used in France and that are paid through the line producer;
Depreciation amounts.
2. Animation productions
Eligible productions
To be eligible for TRIP, an animation film or TV project must meet all of the following criteria:
The project must be an animated film or TV movie (that may function alone or as parts of a series).
Animation documentaries or films used for advertising or corporate purposes are not eligible.
The project must not receive any other financial support for production from the CNC.
The project may not be pornographic or promote violence.
The project must spend a minimum of 1 million Euros on eligible expenses in France. For TV series, it is possible to aggregate the costs of several episodes in order to reach the 1 Million Euro threshold.
Animated projects must obtain at least 36 points on the rating scale of the Cultural Test, including 9 points in the “dramatic content” portion.
Live action projects with a significant proportion of VFX shots may apply to the animation Cultural Test, provided that at least 25% of the shots or an average of two and a half shots per minute of the film are digitally processed to either add characters, visual elements or objects involved in the action, or to modify the rendering of the scene or the camera's point of view. For live action projects applying to the animation Cultural Test, there minimum 5 days shoot rule does not apply.
Eligible expenses
To be eligible, the animation project must ensure that the expenses mentioned below are incurred by the French line producer who submits the application to the CNC.
These expenses must directly contribute to the production needs.
The maximum tax rebate is 4 million Euros. It comprises 20% of the following expenses, excluding tax:
Wages, fringes and compensation for French & European authors, actors (capped at the minimum rate according to the collective bargaining agreement) & crew members;
Including teams in charge of:
rigging & animation set up,
storyboarding,
character conception & modeling,
set conception & modeling,
exposure sheets,
pre-visualization,
rotoscopy,
tracking,
motion capture,
lay out,
animation,
set construction,
colorization,
lighting & rendering,
compositing,
visual effects,
image & sound editing, mixing…
When production staff members are permanent employees of the line production company, only the salaries and social contributions for the period during which they were actually working on the production eligible for the tax rebate are taken into account.
Expenses incurred for hiring technical companies and other providers of services:
equipment, supplies, computer hardware and software used directly for the animation process;
The aforementioned computer software must be paid off during the production of the work for which it was designed or purchased;
negative image film, magnetic sound film, and in general, all digital or non-digital image and sound media; filming, finishing, video, and subtitling studios.
Transportation and catering expenses:
transport of artistic and technical materials and supplies (only as strictly needed for production);
transport and catering for the artistic and technical teams (only as strictly needed for production; nothing lavish).
This also concerns international transport of materials and crew (provided that the transportation “is not of a extravagant nature”).
Depreciation expenses:
Tax-deductible depreciation accruals for fixed assets held by the French production/animation company and directly related to the production of the project for which the tax rebate may be claimed. Only those depreciation expenses that correspond to the period in which the asset was actually used to produce the work eligible for the tax rebate go toward the rebate.
3. Application process
Provisional approval
The line producer of the film must submit a file requesting provisional approval from the CNC, including the necessary supporting documents. The application is available at the CNC or at Film France, and on their respective websites: www.cnc.fr and www.filmfrance.net.
Applications cannot be submitted until a line production contract has been entered by the foreign producer and the French company. This contract (or this letter of intent) is one of the supporting documents required for the assessment.
The starting date for considering eligible expenses is the reception date of the application at the CNC TRIP office. No expense incurred before this date will be considered for calculating the amount of the TRIP, with the exception of authors fee under the condition that this fee was paid the same year as that of the application.
The CNC, following Film France’s assessment, will make a decision on the application, based only on the eligibility criteria (including the rating scales) defined in this document. Should these criteria be fulfilled, the CNC will issue a provisional TRIP approval to the applicant.
Final approval
Once the film has been completed, the line producer must submit a final approval application to the CNC, along with the necessary supporting documents, and a video copy of the film.
The CNC, with the support of Film France, will then verify that the finished film complies with the eligibility criteria and will issue a final approval.
Collecting the international tax rebate
At the end of each fiscal year, the French company must have the production accounts certified by a statutory auditor (CPA). This certification must be sent with the provisional TRIP approval to the tax authorities along with the company’s income tax return. Most of the French companies end their fiscal year on December 31st, and submit their corporate tax after March 31st.
If the amount of the tax rebate exceeds the corporate income tax during the fiscal year, the difference will be paid by the French State.
The tax authorities may pay the tax rebate before the final approval application has been submitted. However, the final approval officially confirms the right to keep this tax rebate. In the event that final approval is refused, the tax authorities will demand that the tax rebate granted for this work be reimbursed.
For the French company, the amount of the tax rebate paid constitutes revenue that is tax and VAT exempt.
TRIP discount
Even though the TRIP is a non-assignable and inalienable debt of the French State to the French Company, as soon as provisional approval has been obtained, it is possible to discount it at a bank, under certain conditions provided by the law. French banks used to discount tax rebates tend to only advance 80% of the prospective Rebate amount.
Credits
During either the beginning or end credits, and in either French or in the original language, productions that receive the TRIP must mention the following: “Cette œuvre a bénéficié du crédit d’impôt en faveur de la production de films étrangers en France.” Proposed English translation: “This film benefited from the French Tax Rebate for International Production.”
Do not hesitate to contact Film France or the CNC for any questions relating to the approval procedure, as well as information on production, notably for questions concerning shooting in France.
FILMING IN FRANCE
