What is Tax credits?
Tax credits are essentially the government’s way of saying, “Hey, come make your movie magic here, and we’ll give you some money back.” On the surface, they seem like a no-brainer: reduce costs, attract talent, and create jobs.
They’re the reason why your favorite blockbuster movies are probably not made where you think they are.
While tax credits may offer short-term benefits, they are, in many ways, not good for the VFX industry in the long run.
Imagine you’re a VFX studio deciding where to set up shop. You can either go to a place with high operating costs, or you can choose somewhere that’s going to give you 20-40% of your expenses back. Yeah, it’s not a tough choice.
VFX Tax Credit Calculation Example Scenario :
Let’s say you’re running a VFX studio in Quebec, and you land a big project with a budget of $5 million. Out of this, $3 million is spent on eligible labor costs (e.g., salaries for VFX artists).
Quebec’s Film and Television Production Tax Credit gives you:
20% base credit on all eligible labor: 20% of $3 million = $600,000.
16% additional credit for VFX: 16% of $3 million = $480,000.
So, the total tax credit you can claim is $600,000 + $480,000 = $1,080,000.
This means that out of the $3 million you spent on labor, you get $1,080,000 back from the government. Essentially, your labor costs are reduced by over a third, making it much cheaper to operate in Quebec.
Let’s say you decide to do this same project in a location without tax credits. Your $5 million labor cost is just that—$6 million. No tax credits to help you out.
The Race to the Bottom
Let’s start with the most glaring issue: tax credits have turned the VFX industry into a global game of leapfrog, where studios chase the best deal, hopping from one tax-friendly location to another .When a region decides to reduce or cut tax credits, the work disappears almost overnight, leaving local VFX professionals scrambling for jobs
Moreover, the reliance on tax credits creates an uneven playing field. Studios in tax credit-rich regions like Montreal, Vancouver, and London have a significant financial advantage over those other places. They can Underbid every Show.
The Impact on VFX Professionals
Imagine being a VFX artist who has to relocate every few years to chase the latest tax credit hotspot. When the work can be pulled out from under you at any moment, you’re less likely to push back against unreasonable deadlines, unpaid overtime, or other industry abuses.
Final Thoughts: The Good, the Bad, and the Tax Credit-y
Tax Credits turned cities like Montreal, Quebec, and Vancouver into VFX powerhouses, drawing talent and big-budget projects from around the globe. The industry’s reliance on these incentives can also lead to instability, and there’s always the looming question of what happens when the credits dry up?
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