Film Withholding Tax (FWT)

Film Withholding Tax (FWT) is a withholding tax on certain payments that applies to companies who qualify for the Section 481 Film Tax Credit. FWT has application from 1 January 2015.

Producer companies (as well as the qualifying company for the purposes of Section 481 TCA 1997) who make ‘relevant payments’ to artistes resident for tax purposes outside the EU or European Economic Area (EEA), must withhold 20% of the payment and pay this over to Irish Revenue.

What payments are subject to FWT?

Relevant payments include payments of any nature made to non-EU/EEA tax resident artistes in respect of artistic services provided directly or indirectly to the S.481 qualifying company.  Although ‘artistes’ is not explicitly defined, it generally refers to actors (including voiceover actors) and cast members only.

Should the artiste operate via a loan out company or their agent invoices the qualifying company, the FWT rules will still apply to the individual. As the UK is no longer part of the EU since January 2021 and is not an EEA country, FWT now applies to relevant payments made to UK resident artistes.

Where an individual is engaged in dual roles, for example as both an actor and director, the payments must be apportioned to determine the amount attributable to the acting services provided and FWT only applies to these artistic services.

FWT should not be applied to payments made via the PAYE system or any expenses which have been reimbursed to the artiste and were incurred by them in the provision of artistic services to the qualifying company.

Payments made to US artistes

There is a Double Taxation Agreement (DTA) between Ireland and the USA. Under the terms of this treaty where the payments (including expenses reimbursed or borne on behalf of the actor) made by qualifying company do not exceed $20,000, then FWT doesn’t need to be applied to the payment in that tax year. Where the amount of the payment and relevant expenses exceed $20,000 in a tax year, FWT will apply on the full amount of relevant payments (as noted this should not include certain expenses). There’s no equivalent provision in DTA’s with any other non-EU/EEA countries.

Administrative requirements

The company making a relevant payment must complete a Form FWT 45 (Certificate of Deduction) when operating FWT. This form is not available to download, however it can be requested by emailing Irish Revenue’s Film Withholding Tax Unit. Your email should include the following information:

• The name of the qualifying company,
• The Tax Reference Number of the qualifying company making the relevant payment,
• A contact name and their contact details,
• Address for forms to be sent to, and
• The number of forms required.

A company must submit a tax return for each month they make a payment and withhold tax.

The tax return must be filed through the Revenue Online Service (ROS) by the 23^rd day of the month, after the month in which the relevant payment is made. The FWT should be paid to Irish Revenue at this time.

Can an artiste get a refund for FWT?

The FWT deducted by the qualifying company from the relevant payment and remitted to Irish Revenue is considered a full and final settlement of the FWT liability. FWT is therefore not refundable. However, the artiste may be able to claim double tax relief on the FWT in their country of residence, or reduce their FWT liability by claiming a deduction for certain expenses.

Where Irish expenses are incurred by an artiste who is subject to FWT, and the expenses are incurred wholly and exclusively in the provision of artistic services to the qualifying company, a claim to reduce the FWT by the amount of the expense may be made to Irish Revenue. This is subject to the expense not being reimbursable to the artiste, and the qualifying company must not include the amount as part of its film relief claim.

The types of expenses that Revenue have specified may qualify for an expense claim include:

• Travel and subsistence expenses,
• Manager and agent’s fees, and
• International air fares relating to travel to Ireland prior to work on the production commencing, and travel out of Ireland after the artiste’s work on the production concludes.

An FWT expenses claim form must be completed for all claims and submitted to Irish Revenue for processing either before or after the making of the relevant payment.

Saffery has extensive experience in advising both qualifying companies and artistes on their Film Withholding Tax obligations. Please get in touch if you have any questions or would like further advice.