Motion Picture Investor Tax Credit
Louisiana's Motion Picture Investor Tax Credit provides motion picture productions up to a 30% transferable tax credit on total qualified in-state production expenditures, including resident and non-resident labor. For productions using in-state labor, Louisiana offers an additional 10% payroll tax credit.
- Provides up to a 40% transferable tax credit.
- $50,000 threshold for local Louisiana productions meeting certain qualifications.
- $300,000 minimum in-state expenditure requirement.
- For fiscal years 2016-2018 the maximum amount of credits that can be claimed per fiscal year is $180 million.
- Tax credits may be used to offset personal or corporate income tax liability in Louisiana.
- Tax credits may be transferred to Louisiana taxpayers.
- Tax credits may be transferred back to the State for 85% of face value; however, the state is not accepting transfers between July 1, 2015 and June 30, 2016.
- An array of changes have impacted this program. View Summary of impacts.
The program is open to all motion picture production companies headquartered and domiciled in Louisiana for the purpose of producing nationally or internationally distributed motion pictures with total Louisiana expenditures exceeding $300,000, and $50,000 for local Louisiana productions meeting certain qualifications.
Qualifying productions include:
- Feature-length motion pictures
- Television pilots, series or movies of the week
- Animated feature films
- Animated short films
- Webisodes or any other digitally distributed motion picture
Non-qualifying productions include:
- Televised news
- Sporting events
Eligible Production Expenditures
- Salaries for services performed in Louisiana directly related to the state-certified production; projects initially certified on or after July 1, 2015 with inidividual payroll payments exceeding $3 million to an individual shall exclude the excess of $3 million as an eligible expenditure. This limitation does not apply to loan-outs
- Producer fees for services performed in Louisiana
- Rentals/purchases of tangible goods from a source within the state and directly used on
a state-certified production in Louisiana
- Camera rentals
- Soundstage rental
- Catering/craft services
- Props rental
- Lumber and other building materials directly related to the state-certified production
- Lighting and grip
- Leasing of vehicles
- Visual FX packages for services performed in Louisiana
- Editing services performed in Louisiana
- Film processing performed in Louisiana by a Louisiana processing company
- Sound mixing
- Other post-production services performed in Louisiana
- Marketing and promotion expenses on certain Louisiana expenditures
- Louisiana resident payroll: Compensation for services paid directly to a Louisiana resident shall be eligible for a 10% payroll tax credit (payments made to a loan-out company are not eligible for this credit).
Non-eligible Production Expenditures
- Salaries for services performed outside of Louisiana
- Rentals/purchases of tangible goods from a source outside of Louisiana
- Rentals/purchases of tangible goods from a source within Louisiana but used outside of the state
- Related-party finance fees
- Application fee
- Expenditures for marketing and distribution
- Non-production related overhead
- Costs related to the transfer of tax credits
- State/local taxes
- Above the line services exceeding 40% for initial certifications issued on and after July 1, 2015
- Above the line services related party transactions exceeding 12% for in state certified productions initially certified on or after December 31, 2015
- Verification report fee
- Airfare for initial certification received on and after July 1, 2016
- Bonds, fees, insurance premiums, finance fees, loan interest fees for initial certifications received on and after July 1, 2016 except fees paid to certain Louisiana companies
Program Statutes & Rules:
All incentive program rules are in the Louisiana Administrative Code maintained by the Office of the State Register.
Apply online using FastLane and submit application fee and verification report fee.
- Advance deposit for verification report fee: For applications for initial certification received on or after July 1, 2015, in addition to the application fee, an applicant shall also submit an advance deposit not to exceed $15,000.
- Verification report fee: For applications for initial certification or requests for final certification received on or after January 1, 2016, applicants shall be responsible for and assessed the actual cost of a verification report completed by a CPA assigned by LED, at a cost not to exceed $15,000 for productions with expenditures ranging from $300,000 o $25 million and $25,000 for projects in excess of $25 million.
- Supplemental verification fee: For applications for initial certification received on or after January 1, 2016, which include notification of post-production activities occurring in Louisiana, a supplemental request for certification of expenditures may be submitted, with additional costs to be borne by the applicant as further provided by the rule.
Initial Certification (60 days from receipt of a complete application)
1. Applicant completes and submits the online application with supporting documents and fees in their entirety to Louisiana Entertainment. Supporting documents include the following:
- Detailed preliminary budget (including above-the-line and below-the-line hires)
- Detailed preliminary Louisiana budget
- Detailed distribution plan
- Script or Synopsis (including principal creative elements: cast, producer, director, etc.)
- Statement that the project meets the definition of a state-certified production
- A notarized statement agreeing to pay all vendors
- Disclosure of any anticipated related-party transactions
2. Effective January 1, 2016, a deposit should be remitted to Louisiana Entertainment for the verification report. The applicant will be assessed the department's actual cost for the production expenditure verification report fee. The maximum fee for the report shall be $15,000 for verification of a cost report reflecting qualified production expenditures between $300,000 and $25 million, and the maximum fee shall be $25,000 for verification of a cost report reflecting qualified production expenditures in excess of $25 million.
At the time of the application, the applicant shall submit a deposit of the production expenditure verification report fee of $7,500 for a production with qualified expenditures projected to be between $300,000 and $25 million, and a deposit of $15,000 for those projected to be in excess of $25 million.
Final Certification requests after December 31, 2015:
For applications for initial certification or requests for final certification received on or after January 1, 2016, Louisiana Entertainment shall directly engage and assign a CPA to prepare a production expenditure verification report on an applicant’s cost report on production expenditure. The applicant will be assessed Louisiana Entertainment’s actual cost for the production expenditure verification report fee and shall make all records related to the tax credit application available to Louisiana Entertainment and the CPA.
Final certification requests before January 1, 2016:
State-certified productions initially certified prior to July 1, 2015, requesting final certification prior to January 1, 2016, may:
- engage a CPA of their choice and submit an audit with their request for final certification prior to December 31, 2015, or
- elect to use a CPA assigned by LED on or after January 1, 2016, but must submit the advance deposit with the request for final certification.
3. Once the application is complete, the project is evaluated for eligibility, and if Louisiana Entertainment determines that the project meets eligibility requirements in accordance with State law and the program rules and regulations, then an Initial Certification letter indicating that the project is now considered a "state-certified production" will be issued. The Initial Certification letter states that the project is eligible to receive potential tax credits and does NOT certify any expenditures for tax credits. Additional detailed guidelines are provided within the initial certification letter. Either an initial certification or denial will be issued by the department within 60-90 business days of receipt of a complete application.
4. The applicant signs the Initial Certification letter and returns it to Louisiana Entertainment.
Final Certification (120 Days from receipt of complete audit and requested support)
1. Once the minimum expenditure threshold is met and prior to the issuance of credits, the state-certified production must submit an audit to Louisiana Entertainment. The audit must be performed by an independent CPA licensed in Louisiana, selected by Louisiana Entertainment if performed on or after January 1, 2016. The audit must conform to GAAP/GAAS as well as the audit guidelines found in the initial certification letter. A final certification letter (credits) or denial will be issued by the department within 120 days of receipt of a complete package.
2. In addition to the audit report, the following should be submitted:
- Full bible run(s) — any and all data detailing expenditures (in-state and out-of-state) related to the production.
- Full payroll data — any and all data related to payroll associated with the production (CPA should validate Louisiana payroll by a review of the declarations of residency required to be maintained with support by the production).
3. Louisiana Entertainment may require additional support and/or verification for certain expenditures.
4. After all supporting documentation is received and reviewed, Louisiana Entertainment and LED will issue a "Final Certification" letter approving the qualifying expenditures and certifying the tax credits.
5. The credits are now transferable.
Q. The film "Brangelina" needs enough wood and nails to build a replica of their French Quarter house on a soundstage facility in Louisiana. Do the wood and other items purchased from the Louisiana hardware store for the production qualify? Does the rental of the facility qualify?
A. Goods will qualify if purchased through a source in Louisiana. A source is a physical nexus with at least one full-time employee. The rental of the facility qualifies if the facility if physically located in Louisiana.
Q. "Brangelina" decides that they need to film at a beachfront casino in Biloxi, Mississippi. What doesn't qualify for Louisiana incentives?
A. Money that is spent outside of Louisiana or expenditures that are indirect or not production-related do not qualify for the tax credit. For example, money spent renting a Ferrari in Louisiana as a prop for the portion of the production in Louisiana may be eligible; however, if that Ferrari is used on the production in Biloxi, those costs will not qualify and the production must exclude that portion of the rental from the qualifying expenditures.
Q. Spending in Louisiana started before receiving Initial Certification. Can expenses still be claimed?
A. Yes. Eligible expenditures are creditable for 12 months prior to and 24 months after Initial Certification.
Q. What is the minimum threshold to qualify?
A. $300,000 in Louisiana expenditures, $50,000 for local Louisiana productions meeting certain requirements.
Q. What qualifies for credit?
A. Only expenditures made for tangible goods and services directly related to the state-certified production within the borders of the State of Louisiana. That includes production payroll for residents and non-residents alike, as long as it is for work performed in Louisiana.
Q. What qualifies for the additional 10% payroll tax credit?
A. To the extent that base investment is expended on payroll for Louisiana residents employed in connection with a state-certified production, each investor shall be allowed an additional tax credit of 10% for Louisiana resident payroll. The additional 10% credit is only allowed on the first $3 million of a resident's payroll. Any amount above that shall be eligible for the 30% credit only. It must be expended on a natural person (not a loan-out) in order to qualify for the additional 10%.
Q. How do I know if something is a Louisiana spend?
A. Services will qualify if performed in Louisiana. Goods will qualify if purchased through a source in Louisiana.
Q. What is a source within the state?
A. A source is a physical nexus with at least one full-time employee and posted business hours.
Q. I'm a Louisiana taxpayer and I earned these tax credits. Can I use the tax credit to offset my personal income tax liabilities?
Q. I'm a Louisiana corporation and subject to corporate income taxes. Can I use the tax credit to offset my corporate income tax liabilities?
Q. I've earned this tax credit and have no Louisiana income tax liabilities. Can I transfer the credit?
A. Yes. The credits are fully transferable.
Q. I've earned this tax credit and I cannot find anyone to transfer this credit to in Louisiana. What do I do?
A. You can opt to transfer the credit to the Louisiana Department of Revenue, who will then issue you a check for 85% of the face value of the credits. In other words, for $1 worth of credits, the State will issue you a check for $0.85; buy back suspended from July 1, 2015 to July 1, 2016.
Q. Must a certain percentage of crew be Louisiana residents?
A. No. However, Louisiana has a skilled and deep crew base and expenditures made on hiring Louisiana residents increases the potential tax credits that can be earned.
Q. Are fuel purchases eligible for tax credits?
A. Yes. However, any taxes charged by the State or any local governing entity in Louisiana are ineligible and must be removed from qualifying expenditures. These amounts are subject to verification by the CPA.
Q. Do fringes qualify?
Q. Are payments made to loan-out companies subject to the $3 million salary limitation?
Q. Are per diems eligible?
Q. Are finance fees eligible?
A. No, unless paid to certain Louisiana companies, in which case fees may be allocated on a pro rate basis based on production activity occurring in and out of state.
Q. How is a Louisiana resident defined?
A. A legal resident who has been domiciled in the state of Louisiana for more than 12 consecutive months of each year within the state is considered a Louisiana resident. The resident must sign a declaration of residency and provide supporting documentation for the production.
Q. My spending in Louisiana started before receiving Initial Certification. Can some of these expenditures still be claimed?
A. The initial certification covers expenditures made 12 months prior and 24 months after the date of initial certification.
Q. What is the going rate for tax credits on the open market?
A. Tax credits usually sell between 80 and 90 cents on the dollar on the open market. Also, you can transfer the credits to the State for 85 cents on the dollar; however, the state buy back is suspended from July 1, 2015 to July 1, 2016.
Q. What if I have not secured distribution yet?
A. We only require that there be a commercial multi-market distribution plan, not a distribution agreement in place.
Q. What if I take a Louisiana crew to another state?
A. That is certainly permissible; however, credits can only be issued for the work performed directly in Louisiana.