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HMRC internal manual

Theatre Tax Relief

HM Revenue & Customs
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Qualifying productions: state aid and the EU

S1217KC Corporation Tax Act 2009 (CTA 2009)

Limit on state aid

The Theatre Tax Relief (TTR) is a state aid.  A state aid is defined in Article 107(1) Treaty on the Functioning of the European Union as ‘any aid granted by a Member State or through State resources in any form whatsoever which distorts or threatens to distort competition by favouring certain undertakings or the production of certain goods shall, in so far as it affects trade between Member States, be incompatible with the internal market.’

The Department for Business Innovation & Skills (BIS) provides further guidance on state aids at .

Any Theatrical Production Company (TPC) must adhere to the rules in the General Block Exemption (GBER) (Commission Regulation (EU) No 651/2014 of 17 June 2014) which came into force as of 1 July 2014.  For state aid purposes the total amount of any theatre tax credits for each undertaking must not exceed 50 million euros per year.  ‘Undertaking’ must be interpreted within the context of the GBER in force.

State aid intensity and cumulation

Each TPC must ensure that it does not exceed the proscribed state aid intensity levels set out in the GBER in force. ‘Intensity’ means the total amount of aid received for the theatrical production.  Breaching the limit may mean that any state aid given in excess of the permissible amount will have to be returned to the organisation or Department making the aid.

A TPC must also consider whether it has received other forms of aid from other sources as these must be ‘cumulated’ to arrive at the intensity figure.

Cumulation means that you get state aid from more than one source going to the same project, or in this relief, the theatrical production.  Normally, you cannot have more than one aid payment for the same action.

For example if you have a notified state aid tax break which you use to increase investment in a new theatrical production, you could not normally then claim a grant from another Government Department for work on the same production.

Other forms of state aid may include: grants, direct payments, tax reliefs, any aid by a state or through its own resources and tax exemptions.  This list is not exhaustive and companies should determine whether any payments, grants etc they receive are state aids which may need to be taken into account when determining whether they have reached an intensity level.

However a TPC can cumulate aid in two circumstances – under the GBER and de minimis aid.

Different GBER aids with identifiable eligible costs may be cumulated with:

  • any other state aid, as long as those measures concern different identifiable eligible costs
  • any other state aid, in relation to the same eligible costs, partly or fully overlapping, only if such cumulation does not result in exceeding the highest aid intensity or aid amount applicable to this aid under GBER.

At the point at which the GBER aid intensity thresholds are broken, the measure that breaks the threshold must be notified and repaid to the organisation or Government Department granting the aid.

GBER Rules on cumulation are at Article 8.

Documentation relating to grants, etc should normally state whether or not the aid is a state aid. However, where there is any doubt the TPCs should seek professional advice or contact BIS to determine whether they are in receipt of other state aids or have gone above the permitted state aid intensity.