The Agenzia delle Entrate (the Italian Revenue Agency) said that the tax credit for the cinema industry, as subsidized tax incentive, is not subject to the general compensation limit of € 700 thousand per year.

With the replies 152 and 153 of 22 May 2019, the Agenzia delle Entrate expressed its opinion about the question of the applicability to the tax credit in the cinema sector of the general compensation limit of € 700 thousand per year. The question has been posed by a company operating in the management of cinema theaters that had benefited from the tax credit (envisaged by the legislative decree n° 60/1999). This opportunity was accorded to operators in the sector until December 31, 2016. Both the general limit of € 700 thousand (provided by the decree n° 241/1997) and the special limit of € 250 thousand (provided for by the law n° 244/2007) were to be respected.

The law 220/2016, however, has re-disciplined the subject and it entered into force 1 January, 2017. It has introduced six new types of cinema credits. Among these there is, first of all, a tax credit for the companies of the cinema theaters, for the technical and post-production industries (investment credit). Furthermore, a tax credit is envisaged for the enhancement of the cinema offer (programming credit). The same law establishes that the special limit of € 250 thousand does not apply to these cinema credits.

Subsequently, the ministerial decree of 15 March, 2018, provided that the investment credit cannot be authorized for an amount exceeding € 2 million per year for each company or group of companies, while the programming credit cannot be used over a maximum annual amount of € 4 million. But the decree does not specify whether or not the annual compensation limit of € 700 thousand is applied to these incentives.

Facing the issue, the Agenzia delle Entrate has definitively clarified that tax bonuses do not have maximum utilization limits. The authority explained that the ceiling does not concern the tax credits arising from the application of subsidized disciplines” as they are. In fact, the cinema credits benefit from a special fund, the so-colled “Fund for film and the audiovisual sector”. In other words, these incentives are financed with an assignment that has already been entered into the state budget and this eliminates the need to set maximum thresholds for compensation. So, the agency concludes that “cinema credits can be used in compensation even beyond the limit of € 700 thousand per year and they are subjects only to the limit of the resources allocated in the fund“.