The accountant, the banker and the producers
To better understand the issue of the “disc” tax credit, we interviewed the accountant Antoine Cocquebert, the music manager of Ifcic Mathieu De Seauve and two representatives of producer unions, Olivier Mahieux de l UPFI and Hervé Rony of Snep.
Antoine Cocquebert, auditor, accountant at Wired expertise and curator and author of the report on Financing the Record Industry , 2004.
What are the limits of the tax credit for small labels?
First, they have understood that this may concern them. Even if they do not make money and do not pay corporation tax, the “negative” tax will be refunded. Most small labels are composed of people who do everything in their structure. This arrangement may be cumbersome to implement in relation to the amounts involved. This, however, is similar to the files that contractors have already filled in (FCM or SPPF type), but with more subtleties and blurring in the definitions of the eligible expenses and under the conditions. Even the experienced accountants of the majors have difficulty in interpreting certain parts of the applicable texts.
A fortiori, it is feared that the small labels do not have the adequate staff to deal with it. The alternative is the use of an accountant who will cost them a significant part of the expected return. Moreover, the texts stipulate that the file must be validated by a chartered accountant and an auditor. Finally, it is necessary to understand both times of the device.
The risk of fiscal control and recovery seems high, as with all previous tax credit schemes in other sectors, which has led many companies to give up. Controllers who have performance constraints do not necessarily understand all the subtleties of the music industry, where they are both publisher and producer. As a result, the tax credit, which is a well-marked device that must be In accordance with its accounting, is likely to be the object of all their attention during a control, as it proves to be a good ratio of time spent / recovery potential.
Is it not a device that structures the sector by forcing to acquire skills?
In my opinion, in this area where you learn a lot on the job, you do not have a real background study to know what the public’s expectations and budgetary possibilities are: what is a fair price for a CD and for how long Will they sell and how?What is the right price for the download? How much of the budget disks has been transferred to telephony or other leisure stations, what is the real shortfall of downloading, and so on. This would make it possible to develop devices adapted to the reality of the market. The tax credit is a very punctual device and does not really structure. This may help to get a heading (it still stops next year, which seems very short), but it lacks sufficiently clear leads to learn more about what might be viable tomorrow.
If the tax credit is to be used to make a record more than one will not find in the ferries or if one can not buy in a legal way, what is the interest? This can even help push a little more a business and make a disappointed artist.
It may be useful to consider training for entrepreneurs to understand how the tax credit works and to provide documentation to their accountant (who is often a board that does not necessarily Specificities of the musical world).
Olivier Mahieux, Head of Economic Affairs at Upfi
What is the tax credit for your members?
The tax credit is a big plus for these independent structures. According to our calculations, this represents between 5% and 15% of the result of a label. This allowed some labels to develop (following the example of Wagram who created other labels). In terms of investment, it is a very strong incentive.
But do businesses have to be structured enough to facilitate that work?
The tax credit alone is not enough … But it is significant enough to have an impact on investment, such as the extension to the payroll that is provided for in the new provisions.
For the self-employed, this is an incentive in the sense that some labels will take more risks knowing that they will recover part of their investment.
What is the return of UPFI members on this tax mechanism?
They are satisfied with the device as a whole. The difficulty is that some small structures do not necessarily have the administrative skills to set up this file, which is very similar to the devices for requesting assistance to the SPPF (justifications, etc.). For microstructures, there will not necessarily be the means or the training necessary to properly mount its file.
Upfi helps its members, answers questions from producers, and informs them of the dates of expert committees (note: the referent to the Upfi is Olivier Mahieux). Thus, at the level of the editing of the file, certain subtleties have to be mastered, particularly in the context of the first expenses taken into account, the filing of the file, etc.
The new mood of the tax credit being studied is an opportunity for Upfi to work to simplify this procedure for its members.
Is the tax credit sufficient to solve the record industry crisis?
This is a significant support, since the amount that can be recovered by a producer is 1.1 million euros. However, it is not the only tax credit that will put producers back on the streets, but it is essential that the label be managed properly and that success be achieved. The purpose of the tax credit is to encourage producers to invest in artists and not to try to act like the majors who have divested themselves of production by trying to reduce costs to maintain their margins.
Independents are more aggressive in seeking to develop through increased supply and investment. The tax credit is a good device to encourage a producer to develop music and new talent. What is required of a producer is to take risks and develop new talents.
And even small structures that have three years of existence and are subject to the IS can access the device. Indeed, in fact, a company not paying the IS can receive a check from the tax department as a tax credit.
The tax credit is intended exclusively for the development of new talent.
Should there be other complementary devices?
The Ifcic fund is a beautiful tool that will be re-bounced and which touches a much more structural level, since the labels that are in need of working capital, will be able to develop new artists and bookkeeping services newcastle to absorb digital changes.
What has the tax credit contributed to your members?
The one already in force has undoubtedly helped the record companies, but the totality of the sum defined by these criteria (10 to 11 million €) has not been used. This led to the decision to create the second tax credit on the basis of ten million euros with an increase in the admissible criteria. But I am not sure that it will be possible for phonographic production to reach this maximum threshold before the end of the program (Editor’s note: especially in a context where despite investment in production, record sales are still falling).
What feedback did your members give you?
The SNEP is not part of the expert committees for the granting of licenses, so I do not necessarily know the details of the difficulties encountered in examining the files.
But I can still say that the device was judged rather complicated and not clear, it missed a practical information to inform the record companies on this subject. In addition, some record companies were adversely affected by the closing date of their accounts. Some, such as EMI, have thus lost at least six months of benefit from the tax credit.
The first version of the tax credit did not meet certain expectations of our members, which changed with the second version. For the latter, Snep wanted the whole of French-language production to be taken into account (in the same way as the film version of the tax credit), particularly in the situation of the disc, as the most important artists need Investments. The government, by keeping the new talents as a criterion, chose instead to take account of the permanent employees responsible for production, up to 1.1 million if there is no dismissal and if sales of sales Digital music is up by 3% annually. Which is not without problems … However, being able to go from 400 000 to 800 000 euros remains very interesting!
What can we do to go further?
Between the new edition of the tax credit, the increase in the Ifcic advance fund (by setting aside the FAI tax for now and hoping that sales of recordings will rise again), we believe that All the devices requested from the new government. There are avenues to be explored, such as the adjustment of the business tax calculated on value added, the amortization rules for clips, but above all the question of VAT at a reduced rate, which has a European dimension. As for the debate on new funding from an ISP tax, that is another matter. The Snep is not on this line.