NBC TOP EXECUTIVES warned both Micheál Martin and Leo Varadkar that Ireland’s tax credit cap for the movie industry could hold the country back from getting big productions.
Documents seen by The Journal reveal that on Leo Varadkar and Micheál Martin’s trip to the US as Taoiseach over the years, movie executives sounded alarms about the increasing cost of film productions and Ireland’s tax treatment.
Section 481 is a tax credit, incentivising film and TV, animation and creative documentary production in Ireland. However, in order to avail of the tax credit, there is a €70 million cap per project.
Recent Freedom of Information documents by TheStory.ie revealed that Tourism and Culture Minister Catherine Martin called for an increase to the tax cap to €100 million.
She argued ahead of last year’s budget that in order to attract more big budget movies and TV shows to be filmed in Ireland by streaming giants Netflix and Amazon Prime, the tax incentives needed to be reviewed.
However, no changes were made in Budget 2023. The lifting of the cap remains the minister’s position, her spokesperson confirmed to The Journal.
This week a report released by Screen Ireland found that the tax incentives are the most important factor for film and TV productions locating in Ireland, with 89% of production companies making an inward investment into the State attributing it to their expenditure to Section 481.
A total of 67% of incoming productions cited the tax incentives as the most important factor when choosing the State as a location for filming.
Documents revealed to The Journal under the Freedom of Information Act show that over the last number of years top NBC executives have made the case to Leo Varadkar, Micheál Martin and Paschal Donohoe on how Ireland could get more movie business.
Martin’s visit to Rockefeller
In September 2021, the then Taoiseach Micheál Martin paid a visit to NBC Studios in Rockefeller Centre and got to visit the set of famous TV programme Saturday Night Live just days before Kim Kardashian hosted.
Documents reveal that the Taoiseach and his officials met with groups of executives at NBC Universal to discuss Ireland’s film and TV production industry.
Martin was told of how NBC Universal was currently shooting a project called Cocaine Bear in Ireland, which was directed by Elizabeth Banks.
NBC said it was spending over €22 million, employing over 150 crew and working closely with Screen Ireland on a New Entrant Diversity and Inclusion Initiative which opened access for new entrants from diverse backgrounds to the industry.
Ireland under consideration
It was indicated that NBC was currently budgeting several productions that they would consider for Ireland, but noted that this will require a discussion about the current project cap of €70 million.
A briefing note for the the then Taoiseach Martin ahead of the visit to the studio noted that NBC Universal had indicated they wish to see the €70 million cap raised by the Department of Finance.
The official briefing document notes that it should be stated at the NBC meeting that the Irish government’s position is that:
“The industry is operating at full capacity in Ireland at the moment, there are a number of plans in place to increase studio space in order to meet demand and there does not seem to be a market failure at present that would justify an increase in the cap.”
‘Strong pitch’ by NBC
An official document from the Department of An Taoiseach, marked confidential, states that “after initial pleasantries and discussion of current NBC investment”, the executives got straight to the point and, “as anticipated, made a strong pitch to see the €70 million cap on the Section 481 tax incentive removed or raised”.
In turn with the increase on the cap and tax changes, NBC linked the pitch with an investment in training and the expectation of career opportunities across a range of skills and qualifications, from carpenters and seamstresses to lawyers and accountants, in addition to mentoring in film direction and production.
The then Taoiseach Micheál Martin took careful note of the presentation, it was noted, on growth prospects in this area, and asked the executives to send a paper with their ideas as soon as possible, so that it could be considered in the context of pre-budget conversations.
A submission followed from NBC Universal in October 2021 to requesting “favourable action” the Section 481 tax credit.
It noted that crews shooting feature film in Ireland are mindful and “intensely focused” on the budget, stating that there have been “extraordinary changes to the screen sector” in the recent years.
The NBC letter stated that when the €70 million cap was adopted in 2015, the average high-end scripted series budget per episode was €4.3 million.
Currently, scripted series episodic costs regularly exceed €10 million, with the upper tier of premium series content approaching and even surpassing €20 million per episode.
NBC said the current €70 million limit “presents a challenge for even eight or ten episode series to commit to Ireland”.
“These large budget series, with the potential to recur year over year, represent the cornerstone of workforce development and skills transfer opportunities,” said the studio.
The letter added:
At present high-end television often surpasses the budgets of tent pole feature films; meaning both industry sectors are and will continue to be impacted by the €70 million cap and in turn, Ireland’s ability to expand its industry cluster.
NBC suggestion
The NBC letter added that the Irish and international production community have requested the project cap be removed in order to realise the potential between Ireland and the screen sector.
The studio called for the minister to be accorded authority whereby they may specify certain conditions allowing eligible expenditures incurred on the production of a film be calculated up to, but not to exceed €125 million, provided such amount is less than 80% of the budget and represents the eligible expenditures on the production of the film.
One condition the minister should specify is 2% of eligible expenditures in excess of €70 million be committed to executing a workforce development production plan in collaboration with Screen Skills Ireland to underwrite formal training for Irish citizens interested in preparing for careers in the screen sector and skills transfer plans for trainees attached to the applicant project, the NBC submission suggested.
A similar case was made to Leo Varadkar when he visited NBC Los Angeles in 2019, where documents reveal to The Journal warnings were given that the typical cost of projects had increased significantly in the last few years and that the €70 million cap “may become increasingly problematic for larger projects”.
While NBC is advocating for the cap to be raised to €125 million, Minister Catherine Martin wrote to the previous Finance Minister Paschal Donohoe before the budget last year, telling him that Ireland is losing out to other countries in attracting major international productions and Ireland is not being considered due to the cap.
She said in the letter that raising the cap would send a “strong international message”.
A statement from the Department of Finance said that the cap on eligible expenditure was increased from €50 million to €70 million in 2015.
The then-Minister for Arts, Heritage and the Gaeltacht Heather Humphreys had indicated that the previous cap made the scheme less attractive to big-budget films, and a sizeable increase was needed to encourage film studios to invest in increased studio capacity, said the department spokesperson.
An increase to €70 million “struck an appropriate balance between providing a sufficient increase to attract big budget films, while also being mindful of the possible cost to the public finances if a number of such films were to come to Ireland”, they said.
“The Department is aware of calls within the industry to increase the cap further, however, this matter is currently not under review,” concluded the statement.
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