2.  A tax advantage for Belgian companies investing in the production of audiovisual works Financing limits:  The total sums paid by all investors may not exceed 50% of the total production budget  The fiscal value of the Tax Shelter Certificate may not exceed € 15 millions per eligible work TAX SHELTER

3. Eligible works  Audiovisual works: - fiction films (long, medium and short-length films) for cinema - documentary films for cinema - animation films for cinema - fiction and animation long films for television, possibly divided into episodes - documentary films for television - series for children or youngsters  European works: - as defined by the Directive of March 10th 2010, called « Audiovisual Media Services » - or bilateral co-production agreement between Belgium (or a Belgian Community) and a third country TAX SHELTER

4. The Tax Shelter Certificate  The « 70/90/70 rule »  System based on production expenses  Qualifying expenses = expenses EEA (direct + indirect), linked to the production  Fiscal value of the Tax Shelter Certificate = 70% of qualifying expenses EEA of which 90% (direct + indir) expenses in Belgium of which 70% direct expenses in Belgium  The Investor prefinances the producer expenses and receives in return a Tax Shelter Certificate

5. Signature of a framework agreement 3 months to pay the sums Temporary tax deduction: sums paid x 310% Definitive tax deduction: 150% of the TS Certificate Return on sums paid: Euribor rate + 4,5% (max 18 months) 18 ( or 24) months to make the expenses Tax audit  approval of expenditures TS Certificate delivered by FPS Finance (70% qualifying expenses in EEA, limited to 10/9 of the Belgian expenses) Transfer of the TS Certificate to the Investor Investor Producer

6. The Tax Shelter Certificate EXAMPLE 1: Acquisition of a Certificate of 100 000 € Qualifying expenses (direct + indirect) EEA: 142 858  Fiscal value of the TS Certificate = 70% of qualifying expenses EEA = 100 000 of which 90% (dir+ indir) expenses in Belgium: 90 000 of which 70% direct expenses in Belgium: 63 000

7. The Tax Shelter Certificate EXAMPLE 1: Acquisition of a Certificate of 100 000 € Advantages for the Investor Sums to pay to the producer(for an optimal return): 48,387%  48 387 Tax exemption: 48 387 x 310% = 150 000 Tax saving: 150 000 x 33,99% = 50 990 50 990  Return on tax saving: 2 603 (5,37%)  Return on sums paid: 48 387 x (Euribor + 4,5%) x 18/12 (max)= 3 992 (5%/year)

8. The Tax Shelter Certificate EXAMPLE 1: Acquisition of a Certificate of 100 000 € Advantages for the Producer  Sums paid by the Investor: 48 387  To deduct: *return on sums paid (18 months): - 3 992 *intermediary fees: (ex: 10%): - 4 838  Netto Tax Shelter advantage: 39 557 (= 44% of Belgian expenses)

9. The Tax Shelter Certificate EXAMPLE 2: Acquisition of a Certificate of 700 000 € Qualifying expenses (direct + indirect) EEA: 1 000 000  Fiscal value of the TS Certificate = 70% of qualifying expenses EEA = 700 000 of which 90% (dir + indir) expenses in Belgium: 630 000 of which 70% direct expenses in Belgium: 441 000

10. The Tax Shelter Certificate EXAMPLE 3 : idem example 2, but insufficient expenses in Belgium  fiscal value proportionnally reduced  If total expenses in Belgium (dir + ind) : 500 000 (instead of 630 000)  Fiscal value of the Tax Shelter Certificate = 500 000 x 10/9 = 555.555  If total expenses in Belgium (dir + ind) : 630 000 but direct expenses in Belgium: 400 000 (instead of 441 000)  Fiscal value of the Tax Shelter Certificate = 700 000 – (41 000 x 400 000/441 000) = 662 812

11. The Belgian eligible expenses  Production costs, operating costs and financial costs ▪ incurred during 18 months from state of signature of a framework agreement (24 M for animation films) ▪ which constitute taxable income in Belgium in name of beneficiary

12. The Belgian eligible expenses 70% min in expenses directly linked to the creative and technical production of the work Examples  Wages, social security contributions, shooting costs,…..  Charges as regards the equipment and other technical means  Postproduction expenses  25% of the transport and accomodation costs  Etc.,… If taxable in Belgium  eligible expenses

13. The Belgian eligible expenses 30% max in expenses not directly linked to the production Examples  Administrative and financial costs, overhead costs  Expenses as regards the assistance to the production  Fees paid to intermediary companies  75% of the transport and accomodation costs  Etc.,… If taxable in Belgium  eligible expenses

14.  Coproduction  the best way is to first find a local producer The Belgian Tax Shelter, What’s in it for you as foreign producer?

15. Need to know more ? Federal Public Service Finance Fiscal Department for Foreign Investments Michela Ritondo Rue de la Loi, 24 (Parliament Corner) 1000 Brussels BELGIUM Email: michela.ritondo@minfin.fed.bemichela.ritondo@minfin.fed.be Phone:+32 257 938 69 Fax: +32 257 951 12