Belgium's proposed tax-shelter legislation is to be readied for parliamentary debate at a meeting between finance minister Didier Reynders and film producers this week (Oct 3).

The current proposal, drawn up by Senator Philippe Monfils, is aimed at encouraging domestic and foreign investors to set up limited partnerships for specific productions.

Details are still being ironed out, but according to the current plan, a maximum 40% of a film's budget, which generally averages Euros 2m in Belgium, could be provided by investors from outside the industry. Companies will be able to invest 50% of their pre-tax profit in a film through a limited -partnership arrangement. 100% - and maybe as much as 150% - of the investment will be tax deductible, with the taxing of return on investment likely deferred to a later point, according to Robert Vanmoesele, an official with the Flemish Film Fund.

There will almost certainly be a stipulation on how much of a film's budget must be spent in Belgium. Producers will also have to make a greater effort to secure pre-sales, so far rare in the territory, to guarantee investors a return prior to a film's release.

The limitation on investment, in particular, is based on a lesson learned through observing the Dutch system, which many Belgian filmmakers have first-hand experience of thanks to the wave of Benelux co-productions spurred by tax breaks there.

"In the Netherlands, companies took full advantage of the tax shelter since there was no maximum on the amount that could be invested. The government's tax revenue fell so fast, they had to set maximum amounts," says Vanmoesele.

In fact, no previous proposal in Belguim has got as far as this one. In June, it cruised through the country's Senate on a unanimous vote and was sent to finance minister Didier Reynders for approval. Later that month. Reynders sat down to discuss the proposal with several of the country's biggest producers, including Patrick Quinet of Artemis Productions; Dominique Janne of K2 SA, Alain Berliner of Writing For Entertainment and Michel Houdmont of Signature Films. This week's meeting will be a continuation of their work so far.

The last time in recent memory a tax shelter became a real possibility in Belgium was in 1987, when finance minister Guy Verhofstadt, who is now the country's Prime Minister, championed an initiative at the federal level but failed to get it through parliament. Even if the current proposal fails, producers say that they will try again. One upside to the current plan laborious progress is that Belgium's film community is at least pre-warned about some of the hazards.

"Although the political climate seems fertile, we have to stay cautious," says Artemis' Quinet, "after all, we've been waiting for this for almost thirty years."