House Bill 364, as Amended by House Amendment No. 2

Business Registration

What businesses are required to register in Delaware?

All businesses and employers conducting business or employing individuals which are qualified to receive the Delaware Entertainment Production Tax Credit in Delaware are required to register with the Delaware Division of Revenue. Registration is completed by filing the combined registration through the Delaware One Stop portal at onestop.delaware.gov.

Applicable business license fees may apply based on the nature and location of the business activities conducted in Delaware.

Are loan-out companies conducting business in Delaware required to register?

Yes. A loan-out company conducting business in Delaware is required to register with the Delaware Division of Revenue and obtain any applicable Delaware business license.

Registration must be completed by filing the combined registration through the Delaware One Stop portal at onestop.delaware.gov.

Mandatory Withholding

Who is responsible for remitting the mandatory withholding?

The production company is responsible for withholding and remitting Delaware personal income tax on payments made to a loan-out company, as defined in Title 30, § 2002F.

What is the mandatory withholding rate?

The mandatory withholding rate is 6.6% of the total amount paid to the loan-out company.

When is the mandatory withholding due?

Mandatory withholding is due and payable on the 15th day of the month following the month in which the payment was made.

Under which entity must the mandatory withholding be reported?

The production company must report and remit the mandatory withholding under the production company’s Delaware tax account and federal employer identification number (FEIN).

The withholding must be reported using the same procedures applicable to ordinary Delaware income tax withholding with the exception of the Annual Reconciliation procedure set forth below.

How does a production company report and remit mandatory withholding?

All withholding returns and payments are required to be submitted electronically through the Delaware Taxpayer Portal at tax.delaware.gov.

Paper filing is available only to entities that meet the requirements for quarterly filing.

How does a production company establish a Delaware Taxpayer Portal account?

Production companies should refer to the Delaware Taxpayer Portal Sign-Up Guide, available at tax.delaware.gov under the Frequently Asked Questions section, for information regarding account registration and access.

Annual Reconciliation

Is a production company required to reconcile withholding remitted on behalf of a loan-out company?

Yes. A production company that remits mandatory withholding on behalf of a loan-out company is required to complete and submit Delaware Form REC-FTC by January 31 of each year.

The form must identify the allocation of the withholding amounts among the individual taxpayers associated with the loan-out company, as defined in Title 30, § 2002F.

The completed Form REC-FTC must be submitted by email to kathy.revel@delaware.gov.

Important: The designated email address is provided solely for submission of reconciliation information. The Division of Revenue cannot respond to inquiries submitted to this email address.

Loan-Out Company Filing Requirements

Does a loan-out company have annual filing requirements?

Yes. The loan-out company is required to submit all applicable Forms W-2 and Forms 1099-NEC by January 31 of each year, in accordance with applicable federal and Delaware reporting requirements.

Claiming Credit for Withholding

How does an employee or subcontractor of a loan-out company receive credit for Delaware income tax withheld by a production company?

An employee or subcontractor of a loan-out company may claim credit for Delaware income tax withheld by a production company by filing the appropriate Delaware individual income tax return.

The taxpayer should claim the amount of Delaware withholding reported on the taxpayer’s Form W-2 or Form 1099-NEC, as applicable.

For information regarding Delaware individual income tax filing requirements, including resident and nonresident filing requirements, taxpayers should refer to the applicable Delaware individual income tax return and instructions available through the Delaware Division of Revenue.