GETTING FUNDS FROM SOFICAS IN FRANCE

The purpose of this article is to briefly introduce you to the SOFICAs financing process.

Understanding how SOFICAs work

How does it work?

Cinema and audiovisual industry financing companies (SOFICAs) are a tax scheme for private investors and a funding source for producers of cinematographic and audiovisual works. SOFICAs collect their funds from private investors, who are mostly taxpayers wishing to support the cinema and audiovisual industry and pay less tax in return. Income taxes can be reduced by up to 48%.

Funds raised by soficas are subject to prior authorization from the Centre National du Cinéma et de l’Image Animée (CNC), the Direction Générale des Finances Publiques (DGFiP) and the Autorité des Marchés Financiers (AMF). In 2021, Soficas have been authorized to collect €73 million, vs €57 million in 2020. Soficas have a claim on future revenues, the percentage of revenues to which these companies are entitled varies according to the amount of funding granted. Nevertheless, the selection process is less severe than for the CNC’s selective grants. Among the soficas approved by the CNC in 2021 are Cineaxe, Cinécap, Cinémage but also Cineventure, Cofimage, Sofitvcine, SG images 2011, Indéfilms.

According to the CNC, the approved soficas are committed to an average distribution of investments for 2020 as follows: 94% of their non-backed investments (risky investment, with no collateral) would be for independent producers, 72% of their cinema investments would be for low-budget films (with a budget of less than 8 million euros), 33% of their investments would be for first and second films, 17% for the audiovisual sector and 10% for cartoons respectively.

Cineaxe

Cineaxe structures 20% of its investments in development aid agreements; these partly finance the writing of screenplays; and up to 80% of its investments in production association contracts whose aid is granted prior to filming and/or in distribution association contracts whose aid is granted prior to release.

The taxpayer investing in Cineaxe must be domiciled in France and can benefit from an income tax reduction equal to 48% of the amount invested. In 2021, the ceiling investment amount for the tax reduction is equal to 18 000€ per tax household. Invested capital should not exceed 25% of the annual net income. By investing, the person subscribes to shares that he/she commits to keep for a minimum of 5 years and a maximum of 10 years.

The last films that benefited from Cineaxe financing are VANISHING (released in October 2021, directed by Denis Dercourt, produced by The French Connection, and distributed by CONDOR ENTERTAINMENT), HEARTBEAST (released in February 2022, directed by Aino Suni, produced by ADASTRA FILMS, and distributed by KINOLOGY) and SENTINELLE SUD (released in April 2022, directed by Mathieu Gérault, produced by AGAT FILMS and distributed by UFO DISTRIBUTION).

Cinécap

Cinécap channels 25% of the funds received to development investment agreements, and 27.5% of the funds to back-to-back production investment agreements. No more than 52% of the investments do not depend on the commercial success of the audiovisual or cinematographic work.

The taxpayer investing in Cinécap must be domiciled in France and can benefit from an income tax reduction equal to 48% of the amount invested, which is limited to 18 000€ per tax household. Moreover, the amount must not exceed 25% of the annual net income. By investing, the person subscribes to shares that he/she commits to keep for 10 years and is aware of the risk of losing the invested capital.

The last films that benefited from Cinécap financing are MY FAMILY AFGHANE (released in April 2022, directed by Michaela Pavlátová, produced by SACREBLEU PRODUCTIONS, Ron DYENS, NEGATIV S.R.O., Petr OUKROPEC, BFILM, LTD, Peter BADAC and distributed by DIAPHANA), FRÈRE ET SŒUR (released in May 2022, directed by Arnaud Desplechin, produced by WHY NOT PRODUCTIONS and distributed by LE PACTE), and Cœurs Vaillants, (released in May 2022, directed by Mona Achache, produced by LES FILMS DU CAP and distributed by BAC FILMS DISTRIBUTION).

Cinémage

Cinémage places 10% of the funds received in an interest-bearing bank account, more precisely a term account, and the remaining 90% of the funds are invested in development investment agreements, production association agreements and/or distribution association agreements. No more than 45% of the funds are invested in back-to-back production and distribution association contracts.

The taxpayer investing in Cinémage must be domiciled in France and can benefit from an income tax reduction equal to 48% of the amount invested, which is limited to 18 000€ per tax household. Moreover, the amount must not exceed 25% of the annual net income. By investing, the person subscribes to shares that he/she commits to keep for a minimum of 5 years and a maximum of 10 years.

The last films that benefited from Cinémage financing are LES GOÛTS ET LES COULEURS (released in June 2022, directed by Michel Leclerc, produced by MANDARIN & CIE and distributed by PYRAMIDE DISTRIBUTION), LA NUIT DU 12 (released in July 2022, directed by Dominik Moll, produced by HAUT ET COURT ET VERSUS PRODUCTIONS and distributed by MEMENTO FILMS INTERNATIONAL), and SENTINELLE SUD (released in April 2022, directed by Mathieu Gérault, produced by AGAT FILMS and distributed by UFO DISTRIBUTION), SENTINELLE SUD having also benefited from the financing of Cineaxe in addition to Cinémage.