Opinion: Why it's cheaper to film in Ireland than Los Angeles (for now)

Analysis: Over 850 productions have claimed Irish tax relief since 2016 showing Ireland is a major player in the global film industry

Brendan McCarthy, Assistant Professor, Department of Accounting & Finance writes for Brainstorm on  Why it's cheaper to film in Ireland than Los Angeles (for now).

Hollywood actor Rob Lowe is perhaps best known for his role as White House speech writer Sam Seaborn on the TV show The West Wing. During an episode of his Literally! With Rob Lowe podcast, Lowe said that his hit game show The Floor was actually filmed in Ireland. "It's cheaper to bring one hundred American people to Ireland", Lowe said, "than to walk across the lot at Fox, past the sound stages, and do it there" –

Lowe explained that filming in Dublin was cheaper than filming in Los Angeles due to the myriad of tax incentives available here (amongst other things). Ireland has long operated a favourable tax regime for film production. Prior to 2015, there existed for many years a tax relief scheme for those eager to invest in film. Under the Taxes Consolidation Act (1997), Section 481 Film Relief, as it was, provided tax relief with regards to the cost of production of certain qualifying films.

Although there was a maximum amount which could be raised under the scheme (being 80% of production costs, up to a maximum of €50 million), tax relief of 100% of the investment was available to the investor. Significantly, it was open to both individual and corporate investors. Individuals could invest up to €50,000 in any year of assessment and corporate investors could invest up to a whopping €10.16m (albeit the total amount which could be invested in any one film could be no more than €3.81m).

While attractive, there was a hugely complex compliance burden, comprising applications to the Revenue Commissioners, approvals and the issuing of certificates before any relief could be claimed. With tax, as with most other things, with greater complexity, comes greater ambiguity - and with greater ambiguity comes greater capacity for abuse. It was perhaps inevitable then that, as part of a larger review of tax incentives in Ireland, S481 Film Relief was wound down under Finance Act 2013 and ultimately replaced.

Since 2015, a new relief, in the form of a credit against corporation tax, has been available to producer companies in the film and film production industry. Similar to the earlier incarnation, the amount of the tax credit is dictated by the level of production costs of the qualifying film, amounting to 32% of the lower of eligible (including cast and crew) expenditure and 80% of total qualifying film production costs, subject to a maximum of €125 million.

The 32% rate means that the Irish film relief scheme ranks among one of the most generous in the world – in California, for example, the equivalent rate is currently only 20% (albeit expected to rise). While there are some compliance obligations associated with claiming the credit, the burden under the new scheme is far less onerous than under the earlier one, and, consequently, far less open to abuse.

Many recognisable domestic and international film and TV productions have availed of this tax incentive in recent years, including Game of Thrones, Kin, Harry Wild, Vikings, Disenchantment and The Favourite. Indeed, with over 850 productions claiming tax relief under the scheme between 2016 and 2024, it is clear that Ireland is a major player in the global film industry.

There is nothing new about this, from Barry Lyndon to Braveheart, and Saving Private Ryan to Star Wars, Ireland has a strong track record and long history of being able to support large film productions. We have good locations, well-trained film crews, and world-renowned performers, not to mention a world-class film infrastructure, exemplified by Ardmore Studios in Co. Wicklow, the wildly successful Cartoon Saloon in Kilkenny, and more recently Troy Studios in Limerick, among others. Such success would hardly have come about without a strong, robust and effective tax incentive scheme underpinning it.

The motto of the great Metro-Goldwyn-Mayer film studio, which we find encircling the head of the lion in its most famous logo, reads "Ars Gratia Artis" or "Art for Art’s Sake". While we have undoubtedly come a long way since the founding of MGM a century ago, we cannot escape the fact that the film business is just that – a business.

As we all know, money talks in business. Rob Lowe tells us that it is cheaper to film in Ireland than in California at the moment. While this may be true, it is also true that designing and promoting a tax incentive around an offering does not diminish, or indeed cheapen, that offering. In fact, it does the very opposite: it shows how much we value it.

That said, news headlines containing the words ‘Ireland’ and ‘tax’ seldom turn out in our favour, especially in these uncertain times. With Donald Trump threatening a swathe of new tariffs in the coming weeks, surely it is only a matter of time before he turns his attention to the very industry that made him a household name.

Indeed, lawmakers in California are already moving to increase the film relief rate to 35%, a full 3% higher than what Ireland currently offers, for film and TV productions made in the Los Angeles area. It is therefore incumbent on the Irish Government to continue to promote and incentivise the work of producer companies here through the protection, and expansion, of S481 Film Relief.

And why is that? Because should the curtain ever come down on Ireland’s current golden age of film production, we can hold our heads up high, safe in the knowledge that we did everything we could to give Ireland the Hollywood ending it deserved.

Brendan McCarthy, Assistant Professor, Department of Accounting & Finance