State-by-state production incentives

North Carolina

North Carolina Film Office
Aaron Syrett, Director
aaron@ncfilm.com
t: (919) 733-9900
hotline: (800) 232-9227
f: (919) 715-0151
www.ncfilm.com

OVERVIEW

North Carolina provides a refundable income tax credit of 25% of all the goods, services, and labor purchased and used in-state. The credit is not assignable. There is a $1M cap per hire, and the maximum credit per feature film has been increased to $20 million and the minimum spend of $250,000. There is no cap on other types of eligible production expenses. Compensation and wages paid to both resident and non-resident employees qualify if the services are performed in North Carolina and withholding payments are remitted to the Department of Revenue. Payments to loan-out companies are subject to 4% withholding, and this must be paid in order for the production to earn the refundable tax credit. Insurance is now a qualified expense. Payroll processing fees paid to an in-state vendor will qualify. Only the taxable portions of per diems qualify for both residents and non-residents. Fringes, per diems and stipends are now qualifying expenses.

DETAILS

Eligible productions include theatrical, television, direct-to-video/DVD features, episodic television series, television mini-series, animation productions, and commercials. For purposes of this credit, episodic TV is considered one production. Political advertising, sporting event coverage and news productions do not qualify.

Any company interested in taking advantage of the 25% tax incentive should complete and submit the form “Notification: Intent to Film” at www.ncfilm.com. Qualifying expenses include: goods and services leased or purchased from a North Carolina business and used or performed in North Carolina; compensation and wages on which North Carolina withholding tax is paid to the Department of Revenue. For goods with a purchase price of $25,000 or more, the qualified amount is the purchase price less the fair market value of the item at the time production is completed. In order for payments to a loan-out company to be eligible for the film credit, the production company (or payroll company) must withhold 4% on payments made to the loan-out company (even if the loan-out company is registered to do business in the state). Spending for services is eligible for the credit regardless of whether paid to residents or non-residents, as long as the services are performed in North Carolina. Payments for meal and hotel per diem, living allowances, and fringe benefits are eligible to the extent they are included in the recipient’s taxable wages subject to withholding. Post-production expenses qualify for the credit if performed in North Carolina.

To receive the refund, the production company must file a tax return at the end of the year and attach Form NC-415. Once NC-415 is filed, DOR will perform an audit and issue an audit certificate that will be filed with the tax return. The credit will be reduced by any state taxes owed and the excess, if any, will be refunded in the form of a check. The form can be filed as soon as all principal photography has been completed, however, you won’t receive your refund until you file your tax return.

The 7.0% sales and use tax, on items purchased or rented for making films, is reduced to 1% with a maximum of $80 for any single item. A certificate, available on the website, must be prepared and presented to each vendor.

The accommodations sales tax is refunded for stays in excess of 90 days.

There is a substantial crew and equipment base in North Carolina, with a number of fully equipped sound stages available, and a major ten stage studio facility in Wilmington including a 37,500 sq. ft. stage with an indoor water tank.

Provided there are any credits on the production, both the North Carolina Film office and the regional office for the area where filming took place must be acknowledged.