Why invest in a Sofica?

SOFICAs, (abbreviation of Societies for the Financing of the Film and Audiovisual Industry), were created in 1985 at the initiative of film professionals. Their aim is to finance audiovisual production. These are public limited companies approved by the Autorité des Marches that collect funds from private investors. In return, a cinema investment allows you to obtain tax exemption in the form of a Sofica.

There are many reasons for investing in Sofica:

The main incentive is Sofica, which has a fairly substantial tax reduction since it can reach €8640. But be careful: Investing in a movie does not guarantee a high return, as it is linked to its success. On average, it is between 1 and 2% after applying the tax advantage.
The possibility of carrying forward capital losses to other capital gains for 10 years.
The increase in the ceiling for tax loopholes to €18,000, by way of derogation from the general regime of €10,000.
An investment in cinema allows diversification that complements other tax exemption products.
A bet on the future due to the development of Internet media and streaming platforms.
A pleasant investment: Covid-19 has seriously affected the movie industry. A cinema investment is a good way to support art while reducing taxation. The citizen feeling of defending independent French creation and of being able to attend film premieres is encouraging.

What are the conditions for Sofica placement?

They have a limited time

Soficas are SA validated by the Autorité des Marches with a maximum lifespan of 10 years. Their main activity is the financing of film industries. To be able to collect funds from private investors, Sofica must obtain the approval of the General Tax Directorate. The maximum amount of collection authorized for each Sofica is determined by Bercy each year with the agreement of the CNC (National Cinema and Animated Image Center).

Sofica is required to direct at least 50% of its investments to independent productions. The investments are unbacked: no repurchase at a price fixed in advance has been concluded.

The Sofica list is limited

The list is limited to twelve for 2022. The subscription campaign starts in October and ends at the end of December. If Sofica meets the conditions to justify a tax reduction of 48%, the collection objectives are quickly achieved. It is then no longer possible to invest.

How to invest in a movie?

This Sofica investment is subject to certain conditions:

Only French residents can benefit from the tax reduction of a Sofica.
To acquire a stake in Soficas, a minimum subscription of €5,000 is required, accompanied by entry fees.
Annual management fees are levied in the range of 1.5% to 3%.
The shares must be subscribed in nominal form and in cash and can be purchased from a bank or wealth advisor.
The amount of the Sofica investment cannot exceed €18,000 and is limited to 25% of total net income. Benefiting from a cinema tax credit that can be carried over to the following years is impossible, so it is necessary to adjust the subscription to the desired Sofica amount.
The shares must be kept for at least 5 years to benefit from the tax advantage.
The tax reduction of a Sofica cannot be combined with that obtained in case of subscription to the capital of SMEs

Taxation of Sofica investments, what are the advantages?

A substantial tax reduction

The tax reduction ranges from 30% to 48% of the capital invested. It is a one-shot tax exemption that applies the year of subscription.

A reduction rate of 30%.
The reduction is a maximum of €5400, with the amount of the Sofica investment being limited to €18,000. In the case of an income tax that is less than the reduction, the profit is lost. As it is not a Sofica tax credit, the amount will not be refunded or carried forward.
An increased rate for a tax reduction.
If at least 10% of Sofica's investments are made on December 31 of the year following subscription, the rate is 36%. The maximum tax gain is €6480.
An increased rate of 48%
To meet the conditions giving rise to a rate of 48%, Sofica must make 10% investments in the year following subscription, in documentary series or in the export of French films abroad.

The deferral of capital losses

Using a loss in value as an additional tax gain is an attractive option. In the case of a possible loss of value generated by a Sofica investment, tax tolerance allows it to be deducted from the capital gains made on other securities: stock market investment or securities account. The carry-over is possible for the following 10 years.

Which Soficas are approved by the CNC?

The Soficas approved by the CNC in 2021 for investments made in 2022 are 12 in number and all qualify for a tax reduction of 48%. The total amount to be collected is 73 million euros. The CNC list specifies for each Sofica: the management company, the share of non-backed investments, the total capital to be subscribed and the tax reduction rate.

Cinema axis 4
Cine cap 6
Cinemage 17
Cineventure
Cofimage 34
Cofinova 19
Entourage sofica
Indefims 11
La Banque Postale image 16
Palatine Star 20
SG Picture 21
Sofitvciné 10

The amount collected by Sofica Cofimage 34 authorized by Bercy is 6 million euros, that of Sofica Cinémage 17 is the highest at 14 million euros.

Conclusion

Investing in cinema remains a risky investment whose main interest is tax exemption. It is a long-term investment with a low return on average. Sofica investment should be limited to 5% of assets.

Sofica: Investing in cinema to reduce taxation