Thinktank questions why studio allowed to save millions despite tiny profits
Jamie Doward
Sun 18 Oct 2020
Daniel Craig as James Bond in the yet-to-be-released No Time to Die. Photograph: YouTube
From Miss Moneypenny to Q, James Bond has long relied upon a series of government officials. Now it has emerged that Her Majesty’s most famous secret agent has also enjoyed the support of another British civil servant: the taxman.
A new report by the investigative thinktank, TaxWatch, suggests EON Productions, the London-based studio that makes the James Bond films, makes very little profit in the UK but has received tens of millions of pounds in tax credits.
Publicly available accounts reveal that Spectre, which came out in 2015, received £30m in tax credits, while the latest film, No Time To Die, whose release has been put back until next year because of the global pandemic, was handed £47m.
The total amount of UK tax credits EON received since the credits were introduced in 2007 is likely to be closer to the £120m mark. Leaked emails revealed that 2012’s Skyfall received £24m in tax credits, while TaxWatch calculates that Quantum of Solace (2008) would have received around £21m.
The postponement of No Time To Die – the 25th 007 blockbuster – was cited by the Cineworld chain as the major reason it recently decided to temporarily close its UK cinemas.
“With cinemas and theatres around the country closing, and cultural sector workers facing real hardship, you have to wonder whether handing over tens of millions of pounds to such a profitable franchise is the best use of public money,” said George Turner, director of TaxWatch.
For a film to receive tax credits it must be certified as “culturally British” by the British Film Institute.
But, then, few brands are as British as the 007 franchise which has generated some $16bn in revenues since it began. Daniel Craig memorably featured alongside the Queen in the opening ceremony of the London 2012 Olympics.
While many parts of the films are shot abroad, production is centred at Pinewood Studios, near London. Editing and post-production work on Spectre was split between Pinewood and Soho in central London
From Miss Moneypenny to Q, James Bond has long relied upon a series of government officials. Now it has emerged that Her Majesty’s most famous secret agent has also enjoyed the support of another British civil servant: the taxman.
A new report by the investigative thinktank, TaxWatch, suggests EON Productions, the London-based studio that makes the James Bond films, makes very little profit in the UK but has received tens of millions of pounds in tax credits.
Publicly available accounts reveal that Spectre, which came out in 2015, received £30m in tax credits, while the latest film, No Time To Die, whose release has been put back until next year because of the global pandemic, was handed £47m.
The total amount of UK tax credits EON received since the credits were introduced in 2007 is likely to be closer to the £120m mark. Leaked emails revealed that 2012’s Skyfall received £24m in tax credits, while TaxWatch calculates that Quantum of Solace (2008) would have received around £21m.
The postponement of No Time To Die – the 25th 007 blockbuster – was cited by the Cineworld chain as the major reason it recently decided to temporarily close its UK cinemas.
“With cinemas and theatres around the country closing, and cultural sector workers facing real hardship, you have to wonder whether handing over tens of millions of pounds to such a profitable franchise is the best use of public money,” said George Turner, director of TaxWatch.
For a film to receive tax credits it must be certified as “culturally British” by the British Film Institute.
But, then, few brands are as British as the 007 franchise which has generated some $16bn in revenues since it began. Daniel Craig memorably featured alongside the Queen in the opening ceremony of the London 2012 Olympics.
While many parts of the films are shot abroad, production is centred at Pinewood Studios, near London. Editing and post-production work on Spectre was split between Pinewood and Soho in central London
.
Cineworld in Stevenage, Hertfordshire: the company cited the delayed release of No Time to Die as a major reason for its decision to temporarily close its cinemas earlier this month. Photograph: Linda Nylind/The Guardian
EON does not fund the Bond films, takes no financial risk, and has never held any rights to make the films since producers Harry Saltzman and Albert R “Cubby” Broccoli acquired the rights to Ian Fleming’s Bond novels and established the company in 1961. The following year, Broccoli and Saltzman’s wives, Dana and Jacqueline, created a company called Danjaq – an elision of their names – incorporated in Switzerland
Under the structure set up by the two men, EON would make the films in the UK and sell them to Danjaq. In the 1990s, Danjaq was incorporated in Delaware.
Bond’s political masters would prefer the spy was very much an exclusively British asset. In February 2016, Tory MP Mark Spencer said tax on the profits from the Bond movies “should be paid in this country, not all over the world”. Danjaq said in a statement: “All the income from the James Bond films received by EON and Danjaq is subject to tax in either the UK or the USA. None of the income is sheltered in a tax haven.”
EON states in its 2015 accounts that once the production of a film has been completed, “the film is sold for a price equal to the total cost of production less the amount received in respect of UK Film Tax Credits”.
Such an arrangement is legal and common in the film industry. TaxWatch suggests it means that little profit will be made in the UK – reducing the tax liability that will accrue. How much tax Bond pays abroad is unclear due to the structure of the franchise’s finances.
But it is clear that it is hugely profitable. In 2014, leaked emails, believed to have been obtained by North Korean agents who hacked Sony Pictures Entertainment, revealed that Skyfall, which grossed $1.1bn worldwide, made $232m in profit for distributors MGM and Sony. Danjaq earned $109m.
Spectre grossed $880m worldwide, excluding revenues generated from DVD and VOD sales.
Danjaq said: “Since the 1960s Danjaq has chosen to make the James Bond films in the UK through EON Productions, resulting in the investment of more than a billion dollars in the UK film industry, the employment of tens of thousands of people, and showcasing the talents of British people to the world.
“EON has utilised the tax credits to help fund the making of Bond films in the manner intended by the government. This has enabled the Bond films to be continued to be made in the UK to the benefit of the UK film industry.”
“Every company in receipt of subsidy argues that the public money they receive is necessary to keep jobs in the UK,” TaxWatch’s Turner said.
“The reality is that Bond has been produced in the UK for decades and many years before the film tax credit system was introduced. Is it really credible that Commander Bond would defect to the CIA?”
Cineworld in Stevenage, Hertfordshire: the company cited the delayed release of No Time to Die as a major reason for its decision to temporarily close its cinemas earlier this month. Photograph: Linda Nylind/The Guardian
EON does not fund the Bond films, takes no financial risk, and has never held any rights to make the films since producers Harry Saltzman and Albert R “Cubby” Broccoli acquired the rights to Ian Fleming’s Bond novels and established the company in 1961. The following year, Broccoli and Saltzman’s wives, Dana and Jacqueline, created a company called Danjaq – an elision of their names – incorporated in Switzerland
Under the structure set up by the two men, EON would make the films in the UK and sell them to Danjaq. In the 1990s, Danjaq was incorporated in Delaware.
Bond’s political masters would prefer the spy was very much an exclusively British asset. In February 2016, Tory MP Mark Spencer said tax on the profits from the Bond movies “should be paid in this country, not all over the world”. Danjaq said in a statement: “All the income from the James Bond films received by EON and Danjaq is subject to tax in either the UK or the USA. None of the income is sheltered in a tax haven.”
EON states in its 2015 accounts that once the production of a film has been completed, “the film is sold for a price equal to the total cost of production less the amount received in respect of UK Film Tax Credits”.
Such an arrangement is legal and common in the film industry. TaxWatch suggests it means that little profit will be made in the UK – reducing the tax liability that will accrue. How much tax Bond pays abroad is unclear due to the structure of the franchise’s finances.
But it is clear that it is hugely profitable. In 2014, leaked emails, believed to have been obtained by North Korean agents who hacked Sony Pictures Entertainment, revealed that Skyfall, which grossed $1.1bn worldwide, made $232m in profit for distributors MGM and Sony. Danjaq earned $109m.
Spectre grossed $880m worldwide, excluding revenues generated from DVD and VOD sales.
Danjaq said: “Since the 1960s Danjaq has chosen to make the James Bond films in the UK through EON Productions, resulting in the investment of more than a billion dollars in the UK film industry, the employment of tens of thousands of people, and showcasing the talents of British people to the world.
“EON has utilised the tax credits to help fund the making of Bond films in the manner intended by the government. This has enabled the Bond films to be continued to be made in the UK to the benefit of the UK film industry.”
“Every company in receipt of subsidy argues that the public money they receive is necessary to keep jobs in the UK,” TaxWatch’s Turner said.
“The reality is that Bond has been produced in the UK for decades and many years before the film tax credit system was introduced. Is it really credible that Commander Bond would defect to the CIA?”
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