VIRGINIA MOTION PICTURE PRODUCTION TAX CREDITS
• Virginia Department of Taxation
House Bill 861 and Senate Bill 257 (2010 Acts of Assembly, Chapters 418 and 599) established the Virginia Motion Picture Production Tax Credit. According to the Acts, qualifying motion picture production companies are eligible to receive a series of refundable individual and corporate income tax credits for taxable years beginning on and after January 1, 2011, in the aggregate amount of $2.5 million for the 2010-2012 biennium and $5 million for any biennium thereafter.
These guidelines and rules (“Guidelines”) are issued by the Department of Taxation (“The Department”) to provide guidance to taxpayers regarding the Virginia Motion Picture Production Tax Credit. These Guidelines are exempt from the provisions of the Administrative Process Act (Va. Code § 2.2-4000 et seq.) according to the provisions outlined in Va. Code § 58.1-439.12.03. As necessary, additional guidelines and rules will be published and posted on the Department’s website, www.tax.virginia.gov.
• Description of credits available
Base-Income Tax Credit: The base credit available is 15 percent of all qualifying expenses (including wages), with a bonus of 5 percent if the production is filmed in an economically distressed area of the Commonwealth, making the total base credit available up to 20 percent of qualifying expenses.
Additional Virginia Resident Credit: The production company is allowed an additional credit of 10 to 20 percent of aggregate payroll for Virginia residents employed in connection with the motion picture production. For companies that spend at least $250,000 in total production costs in the Commonwealth, but not more than $1 million, the credit will equal 10 percent of the total Virginia resident aggregate payroll. For companies that spend over $1 million in total production costs in the Commonwealth, the credit will equal 20 percent of the total aggregate Virginia resident payroll.
Additional Virginia Resident First-Time Industry Employee Credit: In addition to the above outlined credits, companies may claim a credit of 10 percent of their total aggregate payroll for Virginia residents who are employed as first time actors or first time members of a production crew in connection with a production in Virginia.
• Production Eligibility Requirements
These are the minimum requirements a production company must complete to be eligible for the tax credit.
A production company may be eligible for the credit if it:
- satisfactorily completes the initial application;
- meets all deadlines outlined by the VFO; and
- completes all of the requirements specified in the memorandum of understanding.
A production company must also meet the following requirements:
- spends at least $250,000 in “qualifying expenses;”
- makes a best faith effort to film at least 50 percent of principal photography in the Commonwealth;
- agrees to contain a ‘filmed in Virginia’ credit and Virginia logo in the final production;
- is fully funded with a multi-market distribution contract, without taking into account the value of the tax credits; and
- verifies that the project will go into pre-production within 90 days of the approval of the application.
The credit shall only be granted for expenses with respect to eligible motion picture productions. Eligible motion picture productions include, but are not limited to:
- feature length films;
- long-form specials,
- television mini-series;
- episodic television series;
- commercial advertisements;
- videos and music videos;
- interactive television; and
- effective on January 1, 2013, digital interactive media productions.
Eligible motion picture productions do not include:
- political advertising and editorial based content;
- any ongoing television program created primarily as news, weather or financial market reports;
- any live or pre-recorded production featuring current events, sporting events or an awards show or other gala event;
- a reality television production, including, but not limited to, productions in the respect of a game, questionnaire, auction or contest;
- any production that contains obscene material;
- productions whose sole purpose is fundraising;
- a long-form production that primarily markets a product or service;
- a production used for corporate training or in-house corporate advertising or other similar productions;
- games of chance websites and other games of chance productions;
- marketing and promotional websites or microsites; all forms of social media, social networking, marketing and brand promotion;
- infomercials, infotainment or edutainment content;
- solicitation-based productions; and
- productions that do not spend at least $250,000 in qualifying expenses.