TTR50060 - Eligible expenditure: European expenditure: services

S1217GB and S1217GC Corporation Tax Act 2009

Note: for accounting periods ending on or after 1 April 2024, the amount of additional deduction is no longer based on the amount of qualifying expenditure that is also European expenditure. Instead, it is based on the amount of qualifying expenditure that is also UK expenditure. The minimum amount of UK expenditure required is 10% of core expenditure. Please see TTR50080 and TTR40040. The following guidance applies to accounting periods ending before 1 April 2024.

The amount of Theatre Tax Relief (TTR) to which a Theatrical Production Company (TPC) is entitled in respect of a separate theatrical trade is determined by the amount of core expenditure (TTR50010) that is European expenditure. 'European expenditure' is expenditure incurred on goods or services provided from within the United Kingdom or European Economic Area (EEA).

The services provided by third parties may take place in several locations at once.  Furthermore, specific elements of theatrical productions may be outsourced.

Services are provided from within the UK or EEA if they are carried out within the UK or EEA.

Example 1

An actor is asked to take part in rehearsals in the EEA.

The nature of the actor's service is the provision of a specialist performance required for a specific scene as part of the production phase for the theatrical production.

Rehearsing is a production activity and so the costs directly associated with it are items of core expenditure.

Because the rehearsal takes place in the EEA, the actor's service is provided from within the EEA.  The actor's fee is therefore both core expenditure and European expenditure.

Example 2

Having decided to proceed with the making of a theatrical production, a TPC engages a script writer to re-draft the script used during the development phase.

The nature of the service provided is the provision of a revised script.

Revising the script after a decision has been made to go ahead with a theatrical production is a production activity and so the costs directly associated with it are items of core expenditure.

Because the script is written outside of the UK or EEA, the script writer's service is provided from outside the EEA.  The script writer's fee is therefore core expenditure but not European expenditure.

See TTR50110 for information about the apportionment of expenditure related to services provided both within and without the UK/EEA.