FRENCH SUGGEST TAX BREAKS TO LABELS FOR PRODUCTION COSTS
The French government is planning to introduce tax credit schemes that will allow record labels to offset part of their recording costs through a tax deduction that could bring as much as $12.27 million into the industry.
French Minister of Culture Renaud Donnedieu de Vabres announced the plan at this week's MIDEM confab in Cannes. He said the European Commission has been notified of the plans and it would be included in a bill before French Parliament this spring.
The bill also offers tax breaks for wine during lunch, renting Jerry Lewis DVDs and any record that contains songs by either Charles Aznavour, Yves Montand or Maurice Chevalier.
The EC needs to be apprised of any fiscal schemes that will affect competition within EU Member States.
Donnedieu de Vabres insists he's confident the measure will be approved under an international Unesco charter that authorizes states to set up support schemes to promote cultural diversity.
According to the plan, labels will be entitled to tax deductions for production costs and expenses linked to the development of digitization of catalogs. Expenditure on development and digitisation will be limited to $429k per recording. Total tax credits per company should not exceed $613k per year, which represents a lot of croissants.
The news was welcomed by industry executives, particularly from the indie sector.
Universal Music France Chairman/CEO Pascal Negre points to favorable results from countries like Brazil, where music production is financed with a similar scheme.
Stephan Bourdoiseau, Chairman of the French indie label's body UPFI, and chief executive of France's leading independent distributor Wagram, says he anticipates a positive clearance from the European Commission and that the scheme will be retoractive to Jan. 1 of this year.
He suggests some 100 companies could be eligible for the scheme. "In the past few years some 37% companies of four or more employees in the field have disappeared and there is about 100 companies that fit the definition today," he says.
