Invest in Your Passion for Film While Reducing Your Taxes Through SOFICA
An investment in a Sofica share in 2024 offers a 48% tax deduction in 2025, up to a limit of 18,000 euros. Don’t miss this opportunity before the end of the year.
It’s the success story of the year! Released in early May, Artus’s feel-good comedy, “Un P’tit truc en plus,” just keeps breaking box office records. In three and a half months, the film has become the twelfth biggest hit in the history of French cinema, with more than 10 million admissions. With a budget of 6.1 million euros—barely higher than the average budget for French-produced films (4.8 million euros according to the CNC in 2023)—it is also the film with the most admissions since the start of the year, ahead of “Inside Out 2” and “Dune: Part Two.”
It’s a guaranteed jackpot for Artus, but also for Entourage, the film and audiovisual investment company (Sofica), which backed the film.
However, in the film industry, success is not always guaranteed. Far from it. That is why the government offers taxpayers who risk their savings in film production a generous tax break. An investment in a Sofica share in 2024 offers a 48% tax reduction in 2025. The investment is capped at 18,000 euros or 25% of total net income, and the funds are locked up for a period of 6 to 8 years, with the possibility of early redemption.
To qualify for the maximum tax credit (48% instead of 30% or 36%), a Sofica must produce documentary, fiction, or animated series, or export French works to foreign countries. In practice, nearly all Soficas fulfill both of these requirements and benefit from the double bonus, which amounts to the maximum rate of 48%.
Entry fees have a significant negative impact on performance. Please note that the minimum investment is 5,000 euros. To operate, the Sofica charges an entry fee of approximately 4% and management fees ranging from 1.5% to 3% per year.
Soficas in 2024
Every year, new Soficas are created to accept subscriptions from taxpayers. In 2024, the total allocation for approved Soficas is 73.07 million euros, distributed among 13 companies.
Most SoFICAs are offered by banking networks, which reserve them for their best clients. This is the case with Banque Palatine, which is launching the 23rd edition of its Sofica Palatine Etoile, with an approved amount of 3.2 million euros and 30% of investments backed by collateral.
Other SOFICAs are distributed through networks of financial advisors (CGPs). This is the case with Entourage, which is distributed by advisors at Financière d’Orion and online through Linxea.
Soficas play a crucial role in financing French films. In 2023, they helped finance 116 films, including several box-office hits. They are particularly useful for supporting independent productions and debut films. Soficas must limit their share of backed investments to 50% or 4 million euros. They are also required to invest a portion of their funds in films with a budget of less than 8 million euros, in first and second films, as well as in animated films and audiovisual works.
Risks and Returns
Although SOFICAs offer attractive tax benefits, their financial returns—excluding tax benefits—are generally negative. Investors should be aware of the risks associated with this type of investment, including capital loss and lack of liquidity. The performance of Soficas that have been liquidated to date varies widely, with returns consistently negative when measured on a pre-tax basis since 2006. Including tax benefits, returns for most range between 4% and 6.5% per year over a five-year period. However, some of them have resulted in losses.
There is a significant risk of capital loss with SOFICA investments. In its report on film financing, the Institut Général des Finances estimated that the average return on SOFICA investments was 2% per year (including a 48% tax reduction). In the event of capital losses, SoFICs can generate an additional tax benefit because the losses can be offset against capital gains realized on other securities, with the option to carry them forward for up to 10 years.
Investing in a Sofica requires that the subscribed shares be locked up for at least five years (minimum holding period) and until the company is liquidated following the sale of its rights. This investment therefore lacks liquidity for individual investors. Furthermore, there is no organized secondary market for the shares. The average investment by French investors in Sofica funds is 7,200 euros, but our clients are investing the maximum amount of 18,000 euros.
