1 April 2020

Corona Deadlines for Belgian Tax Shelter Expenditures

The entertainment sector, like many other sectors, is facing pressure, especially because of the various measures taken to contain the corona crisis as much as possible.

The Belgian tax shelter system is an essential element in the funding of film, other audiovisual works, and works of performing arts. Tax shelter investors obtain tax advantages through the tax shelter. Expenditures made by the producer must be incurred within a period of 18 months for audiovisual works in general and within 24 months for animated films. The period is 24 months for works of performing arts. The period runs as of the date of signature of the tax shelter framework agreement.

The Belgian authorities have therefore announced that the deadline for expenditure will be extended with six months. This means that the producer now has 30 months in the case of performing arts and animated films to incur the necessary expenditure and 24 months in the case of other audiovisual productions.

However, this new period would not apply automatically: in order to benefit from the measure, it is necessary for the producer to demonstrate that he has suffered direct damage as a result of the measures taken by the government to combat the coronavirus.

What is meant by ‘direct damage’ in this context? Does this mean that the producer must prove that it has become impossible to incur costs at all or is it sufficient for him to prove that it has become impossible to incur certain costs? Or does the producer (on top of that?) have to prove that he has suffered other actual damage, for example because he has had to pay certain compensation for delays as a result of government measures?

In any case, with this ‘direct damage’ condition the authorities indicate that it is still the intention to continue productions diligently and to still make the necessary efforts to incur the required expenditure within the ‘normal’ timeframe. The corona crisis should not be used to justify undue delay or ‘procrastination’.

The analysis always will have to be done on a case-by-case basis. It is therefore essential to document the reasons of the delay, its impact and the difficulties to turn to alternative solutions to meet the Belgian spend requirements.

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