TAX CREDITS AND OTHER FILM AND TV INCENTIVES: THE … · tax credits and other film and tv incentives: the world outside canada and the united states the american bar association

TAX CREDITS AND OTHER FILM AND TV INCENTIVES:THE WORLD OUTSIDE CANADA AND THE UNITED STATES

THE AMERICAN BAR ASSOCIATIONFORUM ON THE ENTERTAINMENT AND SPORTS INDUSTRIES

ANNUAL MEETING

LAS VEGAS, NEVADAOCTOBER 6, 2012

Len Glickman and Max RothschildCassels Brock &Blackwell LLPSuite 2100, 40 King Street WestToronto, Canada M5H 3C2

CASSELS BR4CK

TABLE OF CONTENTS

1) Australia2) Austria3) Bei iq'um4) Brazil5) Croatia6) Czech Republic7) Dominican Republic8) Eurimages

9) FJl10) France11) Germany12) Iceland13) Ireland14) Israel15) Italy16) Jamaica17) Luxembourg18) Malta19) Mexico20) The Netherlands21) New Zealand22) Serbia23) Singapore24) South Africa25) South Korea26) Taiwan /Republic of China27) Trinidad &Tobago28) The United Kingdom

Australia

Federal

The Australian Government has instituted a scheme known as the Australian ScreenProduction Incentive (ASPI) that is referred to as the "primary mechanism of supportingfilm and television production" in Australia. ASPI is comprised of three separateincentive programs, the Producer Offset, the Location Offset and the Post, Digitaland Visual Effects (PDV) Offset. Each of these programs offer rebates on apercentage of the qualifying Australian production expenditure (QAPE) provided certaineligibility requirements are met. These three incentives are mutually exclusive, so noone production can take advantage of more than one of the programs.

The Producer Offset is administered by Screen Australia, an administrative body that is"the key Federal Government direct funding body for the Australian screen productionindustry." The offset is a tax rebate for 40% of the QAPE for a feature film, or 20% of theQAPE for other qualifying productions (including television series, made for TV movies,short animations, non-feature documentaries, etc.). In order to be eligible for the offset,a film must meet certain requirements:

- The production must be completed;- Any activities necessary for the completion of the production must have already

been carried out or else be formally arranged;- The production must have "significant Australian content";2- The production must be for an eligible format (i.e. a feature film, documentary,

direct-to-DVD movie, a series or season, etc.);3- The QAPE must meet the minimum threshold for the relevant format (i.e. AUD

$1 million4 for a feature film);5 and- The applicant must be an Australian company or a foreign company with a

permanent Australian residency and an Australian Business Number.

The Location and PDV Offsets are both administered by the Office for the Arts, theAustralian Government's administrative body for arts and culture policy and funding.The Location Offset offers a 15% refund on QAPE, and is intended for productions that

http://www.arts.gov.au/film-tv/australian-screen-production-incentive2 In order to determine whether a film has "significant Australian content," Screen Australia uses a holistictest. The agency considers elements such as the film's subject matter, the location where it was made,the nationalities/places of residence of those involved in making the film, the details of the productionexpenditure, and any other factors that are deemed to be relevant. Screen Australia has indicated that itmay consider policy issues and the extent to which copyright, creative control, profits, and exploitationrights rest with Australian citizens or residents. For more information please visithttp://www.screenaustralia.gov.au/producer offset/eligibility SAC.aspx, where general guidelines for the"significant Australian Content" test are available.3 http://www.screenaustralia.gov.au/producer offset/eligibility format.aspx4 Approximately USD $1.05 million at the time of writing. All the currency conversions referencedthroughout this paper were calculated using www.xe.com, and are current as of July 31, 2012.5 http://www.screenaustralia.gov.au/producer offset/eligibility QAPE.aspx

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do not meet the significant Australian content requirement of the Producer Offset.6 Inorder to be eligible for the incentive, a production must have a QAPE of at least AUD$15 million.' Additionally, if the QAPE is less than AUD $50 million$ then it must alsototal at least 70% of the total production expenditure. If the QAPE is more than AUD$50 million then the production will be eligible for the incentive regardless of whatpercentage of the total production expenditure the QAPE represents.

The PDV Offset is available to productions requiring significant post, digital and visualeffects work, including those not necessarily shot in Australia. It similarly offers a 15%rebate on QAPE, although only expenditures relating to post, digital and visual effectsare eligible. The only minimum expenditure required to be eligible for the PDV Offset isAUD $5 million9 of QAPE relating to post, digital and visual effects.

Australia also has a number of co-production arrangements in place with countries suchas Canada, China, Germany, Ireland, Israel, Italy, South Africa, Singapore and theUnited Kingdom. Under these arrangements, film or television productions must beapproved as official co-productions by the relevant authorities in each country. ScreenAustralia oversees the co-production program in Australia, and has set out a number ofeligibility requirements for applicant projects:

- There must be a co-producer from each party country with creative roles in theproduction (i.e. more than financial contribution)

- The Australian co-producer must retain a share of the copyright in the finishedproduct

- Although there is some flexibility, most of Australia's co-production agreementsrequire that the production occur entirely in the co-producing countries

- Subject to the approval of each country's relevant authorities, location filming innon-party countries is allowed

- The major participants in the making of a co-production must be nationals orpermanent residents of the co-producing nations, although some flexibilityexists for using actors from non-party countries~o

- The minimum financial and creative participation for Australia is generallybetween 20-40% depending on the specific co-production arrangement

- The expenditure in Australia must be proportionate to the Australiancontribution to the budget ~

6 http://www.arts.gov.au/sites/default/files/pdfs/location-pdv-offset-fact-sheet.pdf'Approximately USD $15.7 million.$Approximately USD $52.5 million.9 Approximately USD $5.3 million.'o For the purposes of co-productions, EU Member State nationals or permanent residents are generallyconsidered to be nationals or permanent residents of all other Members States. Likewise, under anagreement between Screen Australia and the New Zealand Film Commission, Australians and NewZealanders receive mutual recognition in co-productions." However, Screen Australia's guidelines indicate that "the proportion of expenditure on Australianelements can be up to 5 per cent less or up to 15 per cent more than the financial contribution of theAustralian co-producer."

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- The co-production must be made in accordance with a co-producers'agreement, the content of which varies according to the requirements set out inthe relevant co-production arrangements12

Once these requirements are met and a project is approved as an official co-production,it is automatically considered a national film of each of the participating countries. Thismeans that it is eligible for all federal and state production incentives in Australia, andmay bypass the significant Australian content test for accessing the Producer Offset.~3

Executive Summary

Name Incentive Minimum Spend Cultural Test? Other Requirements

Producers Offset 40% rebate on QAPE AUD $1 million for feature Yes, production must Production must befilms have "significant completed(approx. USD $1.05 Australian content'million) Must be an eligible

production format

Location Offset 15% rebate on QAPE AUD $15 million (approx. No Applicant must beUSD $15.7 million), but if Australian company,less than AUD $50 million or if foreign must have(approx. USD $52.5 permanent localmillion) then this cost must residencyconstitute at least 70°/o ofthe total production cost

PDV Offset 15% rebate on QAPE AUD $5 million Norelating to PDV (approx. USD $5.3 million)

Australian States

In addition to the federal incentives described above, various states within Australia alsooffer their own incentives to attract local productions. Specifically, the states of NewSouth Wales, Queensland, South Australia, and Victoria all offer incentives of somevariety. The amounts available under most of these state incentives are determined ona case-by-case basis according to the impact of a production on the local economy.These state incentives are available to productions in addition to the federal incentivesdescribed above.

New South Wales

New South Wales (NSW) offers two financial incentive programs, both of which areadministered by Screen NSW, an agency of the state government. The Film &Television Industry Attraction Fund (FIAF) is a cash rebate incentive. It is available toproductions that are "footloose," which means that they must have alternativeproduction destinations available to them. Alternatively, the incentive is available forpost, digital and visual effects (PDV) work on projects shot elsewhere.

12 For more information on co-productions, see the Co-Production Program Guidelines, available athttp://www.screenaustralia.gov.au/documents/SA publications/Guidelines/clines Copro.pdfThe benefits available under the Co-Production Program are detailed at:

http://www.screenaustralia.gov.au/coproductions/quidelines.aspx

In order to be eligible for the FIAF, productions are required have a minimum localexpenditure of AUD $5 million14 in NSW, or at least AUD $500,00015 in PDV costs ifonly post-production is taking place in NSW. The amount awarded to each productionunder FIAF is determined via criteria such as the local labour costs incurred, the degreeto which local cast and crew are utilized, the economic benefits to the state, and theregional locations used in principal photography.~6 Applications for the incentive must bemade prior to the commencement of either pre-production or post-production."

The Regional Film Fund (RFF) is also available to productions that film outsidemetropolitan Sydney. The RFF is a cash grant of up to 35°/o of the production's plannedlocal expenditure, with a minimum award of AUD $20,000$ and a cap of AUD$100,000.19 In order to be eligible, productions must be fully financed, and a minimum of50% of the total production cost must be allocated to expenditure in NSW. Additionallythe production must shoot in regional NSW for a minimum of five days.

Queensland

The state of Queensland offers a general production incentive program run by ScreenQueensland. This program has three separate streams: a production incentive grant,a location scouting grant, and a state payroll tax rebate. Applications for the twogrants must be made upon the commencement of pre-production, while applications forthe tax rebate must be made after the completion of a project.

In order to be eligible for the production grant, a project must have a planned localproduction expenditure of at least AUD $12 million,20 or AUD $8 million21 for animationprojects. However, Screen Queensland does indicate that it is willing to negotiate theminimum expenditure amounts for productions of pilots for long-running televisionsseries. Additionally, the eligibility requirement for the state payroll tax rebate is set at alower minimum local expenditure of AUD $3.5 million.22

The two grants each offer a discretionary amount determined by Screen Queenslandbased on the productions anticipated local expenditure. The amount awarded for theproduction grant is based upon not only the anticipated local expenditure but also the"engagement of bona fide Queensland practitioners and/or the creation of infrastructurein Queensland."23

South Australia

'a Approximately USD $5.3 million.'s Approximately USD $525K.'s http://ausfilm.com.au/production-resources/member-directory/screen-agency-partners/screen-nsw/"http://www.screen.nsw.gov.au/index.php?page_id=105&fund id=26'$Approximately USD $21 K.'g Approximately USD $105K.20 Approximately USD $12.6 million.21 Approximately USD $8.4 million.22 Approximately USD $3.7 million.23

http://www.screenqueensland.com.au/create/incentives.html

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The South Australia state government offers a payroll tax exemption through its agency,the South Australian Film Company. This incentive exempts payroll tax from beinglevied on wages to persons involved in the production of a feature film, and reduces aproduction's payroll tax total by approximately 4.95%. Applications for the exemptionare granted on a case-by-case basis. In order to be eligible for the tax exemption, aproduction must be wholly or substantially produced within the state of South Australia,it must involve or result in the employment of state residents, and must result ineconomic benefits to the state.24

Victoria

Victoria offers three separate incentive programs, the Production Investment AttractionFund (PIAF), the Regional Locations Assistance Fund (RCAF), and the Head ofDepartment Incentive (HoD). Each of these programs is administered by the ProductionInvestment Attraction Committee, and the amounts available under each of theseprograms are assessed on a case-by-case basis.

PIAF is the most broad and robust of the three incentives, and is generally intended toattract media productions to the state. In order to be eligible for the incentiveproductions must be "footloose," and either a minimum of AUD $3.5 million,25 or else70°/o of the total production budget must be spent in Victoria. Additionally, PIAF offersPDV grants to productions using PDV services/facilities in Victoria. In order to beeligible for such grants, a project must utilize at least three separate PDV entities.However, if the production is also taking advantage of the Federal PDV Offset then itmust also spend a minimum of AUD $500,00026 on PDV work in Victoria to be eligiblefor a PIAF PDV grant.

RCAF is designed to attract productions to locations outside of metropolitanMelbourne.27 In order to be eligible for the incentive, a production must be footloose,and must utilize regional Victorian locations during principal photography for a minimumof five days. Additionally the production must have its budget secured before it appliesfor RCAF, and this budget cannot incorporate the incentive.

There is also an HoD incentive of up to AUD $50,00028 available for productions thatemploy Victorian Heads of Department.29 This incentive appears to be even more case-specific than either PIAF or RCAF, as all further information on the HoD incentive isavailable only upon request.

24 http://www.safilm.com.au/library/PayrollTaxExemptionupdatedMay2012_O.pdfZS Approximately USD $3.7 million.26 Approximately USD $525K.27 http://www.film.vic.gov.au/_data/assets/pdf_file/0017/629/RLAF_Guidelines.pdf28 Approximately USD $52K.29

http://www.film.vic.gov.au/funding/incentives

Executive Summary

State Name of Incentive Form of Incentive Minimum Spend Additional Requirements

New South Wales Film &Television Cash rebate AUD $5 million on Production must be "footloose"Industry Attraction Fund production (approx.

USD $5.3 million), or Applications must be made prior

AUD $500k on post to pre or post-production

(approx. USD $525k)

New South Wales Regional Film Fund Cash grant 50% of total Production must be "footloose"production budgetmust be spent in Production must have budget in

NSW place

Production must shoot inlocations outside of Sydney forfive days

Queensland Production Incentive and Cash grant AUD $12 million for Production must createLocation Scouting features (approx. significant economic opportunity

USD $12.6 million), and development within the stateAUD $8 million foranimation (approx.USD $8.4 million)

Queensland State Payroll Tax Rebate Tax rebate AUD $3.5 million N/A(approx. USD $3.7million)

South Australia State Payroll Tax Complete /partial N/A Production must be produced atExemption up-front exemption least substantially within South

from payroll taxes Australia, must employ stateresidents, and must result ineconomic benefit to the state

Victoria Production Investment Cash grant AUD $3.5 million Production must be "footloose"Attraction Fund (approx. USD $3.7

million) or else 70% of For PDV grants, productions

total production must utilize at least three

expenditure separate PDV entities if notreceiving Federal PDV Offset

AUD $500k on PDV ifaccessing the federalPDV Offset (approx.USD $525k)

Victoria Regional Locations Cash grant N/A Production must be "footloose"Assistance Fund

Production must have budget inplace

Production must shoot inlocations outside of Melbournefor five days

Victoria Head of Department Cash grant of up to N/A Production must be "footloose"Incentive AUD $50,000

Production must employ VictorianHeads of Department

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Austria

In Austria, the Film Location Austria (FISA)30 initiative is offered by the Federal Ministryof Economy, Family and Youth. This program is designed to foster the Austrian filmindustry and infrastructure by partially funding productions. The FISA program wasbroadly modeled on Germany's Federal Film Fund (DEEP).

PISA is available to film production companies located in Austria, or within the EuropeanEconomic Area (EEA) so long as they have an Austrian branch.31 Additionally theapplicant production company must have produced and released at least one featurefilm in Austria or another EEA country within the preceding five years.32 The applicantmust also personally contribute at least 5% of the total production cost.

PISA offers a cash grant of up to 25% of the eligible Austrian production expenditure, toa maximum of 15% of the total production cost. The total annual grant budget for 2012is €7.5 million,33 and the maximum grant possible for any single production in 2012 is€1.125 million.3a

In order to be eligible for a grant under PISA, a film must meet certain qualifyingrequirements. Only feature films and documentaries that meet minimum length 5 andproduction cost36 requirements are eligible. The film must be theatrically released inAustria within one year of completion, and must have a distribution plan in place at thetime of application. There must be a German language version of the film produced,although subtitles are sufficient to meet this requirement. Additionally, filming must notbegin before the grant application is submitted, and must begin within four months ofthe grant being awarded. Finally the film must pass a cultural test that focuses onAustrian cultural content, the nationalities of the filmmakers, and the production servicesand facilities used in making the film.

In addition to PISA there is also a regional film and television production incentiveavailable in the state of Tirol.37 The Cine Tirol Production Grant38 is a cash grantadministered by Cine Tirol, an agency of the Tirol Tourist Office. It has been called oneof the most alluring incentives in Europe,39 and can amount to as much as 50% of theeligible local production expenditure. The provisioning and amount of the grant mostly

3o For more information on PISA, see the Film Location Austria Guidance Notes for Support Schemesissued by the Federal Minister of Economy, Family and Youth in agreement with the Federal Minister ofFinance, available at http://www.filmstandort-austria.at/service/downloads/31 The EEA is a single market that includes all 27 members states of the European Union, as well asthree European Free Trade Association member states — Iceland, Liechtenstein, and Norway. For moreinformation on the EEA please visit http://www.efta.int/eea/eea-agreement.aspx32 This "reference film" must have been released with at least ten copies, although some exceptions arepossible under the Guidance.3 Approximately USD $9.2 million.3a

Approximately USD $1.4 million. See http://www.filmstandort-austria.at/foerderunq/fags/#01003s 79 minutes, or 59 minutes for children's films.3s €1 million for feature films (approximately USD $1.2 million), €200K for documentaries (approximatelyUSD $246K).37 Sometimes spelled "Tyrol"38 __h_ttp://www.cinetirol.com/en/incentive/39 http://www.p3update.com/preproduction/locations/679-feature

depends on two factors: the "Tirol Effect," which refers to the production's economicimpact on the region; and the "Tirol Reference," or the degree to which the productionthematically relates to Tiroi. Additionally the overall quality and internationalmarketability of the production also play a role in Cine Tirol's discretionary awarding ofthe grant. The only conditions for eligibility are that at least 80% of the total funding forthe project is in place at the time of application, and that the total public funding for theproject cannot exceed 50% of the entire budget.40 Only experienced producers areeligible to apply for the grant.

Austria is also a party to the European Convention on Cinematographic Co-Production(ECCC), which governs co-production agreements between its members. The terms ofthe Convention stipulate that in order to obtain co-production status a project must haveat least two co-producers from different member states.41 Additionally, the productionmust qualify as a "European cinematographic work," which involves a cultural testbased on the nationalities of the filmmakers.42 Once these two criteria are fulfilled, aproduction becomes eligible for all the incentives granted to national films in each of theco-producing member states. However, various conditions attach to co-productionsunder the ECCC, including joint ownership of the original picture and sound negative byeach co-producer.43

Austria also has a bilateral co-production agreement in place with Canada. Thequalification requirements for this agreement include minimum and maximumcontribution percentages for the co-producers from each country, proportionate revenuesharing, and co-production crediting. Additionally, each co-producer must own a copy ofthe final negative and hold any necessary reproduction rights.44 All qualified co-productions are fully eligible to take advantage of all incentives available in bothcountries.

Grants under FISA can be combined with other funding, up to a maximum of 50% of thetotal production budget. Austrian production companies are only responsible for theircontribution to a co-production, and only that contribution is eligible for support.

ao Public funding can account for up to 80% of the total budget in the case of low budget productions.a' Additional co-producers from non-member states are permitted so long as their total contribution is notmore than 30% of the total production cost.42 For more information on the test to qualify as a "European cinematographic work," please visithttp://conventions.coe. int/Treaty/en/Treaties/Html/147. htm#ANX-2For more information on the rules applicable to co-productions under the ECCC, please see Articles 4-

15 of the convention, available at: http://conventions.coe.int/Treaty/en/Treaties/Html/147.htmas

Please see Article 9 of the co-production agreement between Canada and Austria, available at:http://www.telefilm.ca/en/coproductions/coproductions/agreements

Executive Summary

Name Format Amount Minimum TotalProductionCost

Minimum AustrianExpenditure

Cultural Test Other Requirements

Film Cash 25% of qualifying €1 million for 20°/o of total Yes, different Applicant producer must beLocation grant expenditure in feature films production cost applicable tests resident of Austria or otherAustria Austria, up to a (approx. USD for standard EEA state

maximum of 15% $1.2 million) films andof the total documentaries Applicant producer must have

production budget €200K for produced afeature-lengthdocumentaries film that was commercially

Maximum award of (approx. USD released in Austria within the€1.125 million for $246K) previous five years2012 (approx. USD$1.4 million) The film must be

commercially released inAustria within one year ofcompletion

The film must be anappropriate format and length

Cine Tirol Cash Discretionary N/A N/A One of the two The amount awardedProduction grant award of up to 50% eligibility and depends on the production'sGrant of the eligible local amount economic impact on the state

production considerations,expenditure the "Tirol The amount award depends

Reference," on how much the

considers the production's content reflects

production's the state

content and At least 80% of the totalhow it reflects funding for the project is inthe state place at the time of

application

The total public funding forthe project cannot exceed50% of the entire budget, or80%for low budget projects

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Belgium

There are a variety of film and television production incentives available in Belgium.There is a national Tax Shelter available to both local and foreign productioncompanies. Additionally, there are a number of regional and community funds available:the Flanders Audiovisual Fund (VAF), the film fund of the Centre du Cinema et deI'Audiovisuel (CCA), and the Wallimage / Bruxellimage Fund (WBF).

The Tax Sheltera5

The Tax Shelter is administered by the Fiscal Department for Foreign Investments, adivision of the Federal Public Service of FINANCE department. The Shelter is availableto both Belgian and foreign companies looking to invest in audiovisual production inBelgium. The only eligibility requirements for these investment companies is that theycannot be credit institutions, and their main purpose cannot be the development /production of audiovisual works.a6

The investment company must provide a financial contribution to an audiovisualproduction in Belgium. This must be done by signing a framework agreement with aresident, or local branch of a foreign, audiovisual production company.47 The investmentis then made to this audiovisual production company for the specific project. There isnotably no limit to the number of investors in a project.

The investment can be in the form of either direct investment (i.e. the acquisition ofrights in the final production) or loans. However, at least 60% of the financialcontribution must be in the form of direct investment, and no more than 40% may be inthe form of loans. Additionally, the invested amount must not exceed 50% of the totalbudget for the production.

Under the Tax Shelter, the investment company is eligible to receive a tax exemptionon the taxable earnings retained as a result of the investment. This exemption canamount to up to 150% of the investment, to a maximum of the lesser of €750K48 or 50%of the investment company's total taxable retained earnings.

In order to be eligible to benefit under the Tax Shelter, the production cost incurred inBelgium must amount to at least 150% of the direct investment in the production. Thesecosts must be incurred within 18 months of the signing of the framework agreement.

The only production formats that are eligible under the Tax Shelter are:

- Full, medium, and short-lengths films

- Television long films

as For more information, visit http://www.minfin.fgov.be/portail2/belinvest/en/presentation/who.htma6 Television broadcasters are also barred from eligibility.47 Only companies whose main business purpose is the development and production of audiovisual worksare eligible to fulfil this role in the Tax Shelter. Television broadcasting companies do not qualify asaudiovisual production companies. Additionally, companies with outstanding debts) to the Belgian SocialSecurity Office are excluded from eligibility.48 Approximately USD $922K.

- Documentaries

- Animated films (intended for theatrical screening)

- Animated television series

- Documentary television series

- Children's series

Finally, in order to qualify for the Tax Shelter, an audiovisual production must berecognized as a European work according to the Audiovisual Media ServicesDirective.49

For the sake of clarity, the Federal Public Service of FINANCE department has providedthe following diagram50 to illustrate how the shelter would work in the case of a singleinvestor in a production with a budget of €1 million:51

~~~mpl~on~e i~avestar and a budget ctf @t mll~anl

lnve~►tment ~~~ ~nv~strnent

~~ailf~,C~9b ~x~rnptCon of tVt~ retained tax~6l~

~.1JK7~iD

~3X 5~1/111~ Uf

C~ recl ~nuestin k.r~an Odin. pc~du~tian~~Cgttl°~I~tQi1 C~ 7't~~1~3~ '8~~,~ttt~ t~udget +~f ~1,~O~,OEtO

~3QO.~t~O

Expenses incurred inBet~'runn 45t1„(1(DD

~xarrspte: a company roves#s 5~t1,Q00+~~tras i~ ~ ~ilrn ~30(I,!t~€~ autos ire the-form ~[a c~-pra~iu~tlar~ ar~d 24t3,UQ~ autos (n the forr~w of ~aan~~. It can b~ granted anex~ ptfon of 75fi,t100 autos, If the expen s ir~~urred in 8~tgl~rn amount to 15 9'0cif 3t~C1,Qg0 ~!uiro~~ i<~: 45q,D00 ~~r~a5 fob the pt°t~du~tign ~n~ crp~rating cast,

49 In order to be considered a European work, a production must either originate in a European Unionstate or conform to a co-production agreement signed by a European Union state. See Article 1,paragraph 1(n) of the Directive, available at:http://ec.europa.eu/avpolicy/info centre/a z/index en.htm#t17~~Originally available at http://www.belgiumfilm.be/tax-shelter/51 Approximately USD $1.2 million.

S~~

The Flanders Audiovisual Media Fund

The VAF is dedicated to supporting audiovisual production from, as well as internationalco-productions with, the Flanders region in northern Belgium. The fund's mandate isprimarily fulfilled52 by supporting production in Flanders. Support is available for theproduction of fiction, documentary, animated, and experimental films. Additionally,support is allocated for four different activities: scriptwriting, development, production,and promotion.

The Centre du Cinema et de I'Audiovisuel Film Fund

The CCA is aimed at promoting audiovisual works from the southern, French-speakingpart of Belgium. Its annual budget of €15.7 million53 is used to provide various forms ofsupport of support to cultural projects.54 It is available for feature-length, short,documentary, animated, television, and experimental films, and is allocated at differentstages in the production process.55 The fund is mainly allocated to internationalproductions but only Belgian-based production companies may apply on behalf of aproduction.

The Wallimage / Bruxellimage Fund56

The WBF is a division of the CCA, and supports the audiovisual industry in the Walloonregion of Brussels. The fund operates by acting as a co-producer for productions thatfeature the region or utilize local talents or technicians. Its annual budget iscompartmentalized with €2.5 million57 for Walloon feature films, €1 million for Walloonanimated series, and €2 million58 for co-productions. The fund also supports localaudiovisual infrastructure via capital investments and loans.

Co-Productions

Belgium is also a party to the ECCC, and co-production agreements with Canada andChina. Each of these agreements stipulate the minimum and maximum levels ofparticipation for co-producers in an international production.59 Additionally each co-producer under these agreements is entitled to a copy of and reproduction rights for anegative of the finished product. Films that qualify as co-productions become eligible forthe production incentives available in each country.

5Z 78% of the VAF's annual budget goes towards production support, but the Fund also supports Flandersaudiovisual productions via promotional financing, scholarship-based training programs, and survey-based research programs. For information on these aspects of the VAF visit http://www.vaf.be/taal/en53 Approximately USD $19.3 million.5a This support is allocated both selectively and automatically, and can come in the form of subsidies andadvances on revenue.ss Scriptwriting, development, production, completion, promotion, and distribution.ss

For more information, visit http://www.wallimage.be/news.php?lanq=uk57 Approximately USD $3 million.58 Approximately USD $2.5 million.59 The percentage of financial contribution must be between 30% and 70% for the purposes of theagreement with Canada, and between 20% and 80% per the agreement with China.

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Executive Summary

Name Form Amount Eligible Investment Minimum Expenditure Other Requirements

Belgian Tax Tax exemption Up to 150% of Investment must be Production costs Tax shelter onlyShelter on retained the investment at least 60%direct incurred in Belgium available to eligible

earnings (i.e. acquiring rights must amount to at least investment companiesresulting from Maximum of in the final 150% of the directinvestment €750K (approx. production) and no investment Tax shelter only

USD $922K) or more than 40% loans available to50% of the Production costs must productions of eligibleinvestor's total Investment must be be incurred in Belgium formatstaxable retained made by signing within 18 months of theearnings framework signing of the

agreement with an framework agreementeligible audiovisualproduction company

Invested amountcannot exceed 50%of the production'stotal budget

Brazilso

There are two tax incentive schemes for film and television productions available inBrazil: the Audiovisual Law 8685/93, and the Cultural Incentive Law 8313/1991(commonly known as the Rouanet law). Both of these schemes are administered by theBrazilian National Agency of Cinema (ANCINE).61 Only Brazilian companies registeredwith ANCINE can take advantage of these tax incentive schemes. As such, foreignentities looking to work in Brazil should arrange partnerships with local productioncompanies that can work directly with ANCINE.

The Audiovisual Law

The Audiovisual Law allows individuals and corporations to deduct up to 3% of theirincome tax by investing it into local film and television productions. This amount must beinvested by purchasing Audiovisual Investment Certificates linked with a productionthat has been approved by ANCINE. These certificates entitle the buyer to share in thefilm's revenues. Additionally, foreign entities that receive royalties for a production madein Brazil may deduct up to 70% off their withholding taxes by investing the amount into aproduction approved by ANCINE. A maximum of BRL $3 million62 per project can bededucted in this way.63

The Audiovisual Law regulations also provide for a total exemption from theCONDECINE (Contribution for the Development of the Cinematographic Industry). TheCONDECINE is a 11 %tax on all royalty payments (including copyright) remittedabroad. The exemption applies only if the foreign entity has invested at least 3% of itstotal production budget in Brazilian film projects.

The Rouanet Law

The Rouanet 1aw64 offers individuals and corporations a tax credit for donations orsponsorships in the cultural field. The law allows individuals and companies to deductup to 40% of their sponsorship of/donation to a qualifying production off of their incometaxes. This deduction can equal up to a maximum of 6% of the individual total incometax, or 4% for a company. The sponsorships/donations can only be made forproductions approved by either the Ministry of Culture or ANCINE.

60 Brazil is among a number of Latin American destinations that have grown in popularity over recentyears. Vibrant locales such as Argentina and Cuba have attracted productions even without formalincentive programs, as a result of experienced industry workers and low production costs. Other countrieslike Colombia appear to be on the verge of expansion, with local politicians promising incentive structuresvia pending legislation. For more information, see:http://www.variety.com/article/VR 1118053176?refcatid=13~ http://ancine.gov.br/6z Approximately USD $1.5 million.s3

For more information see: Cones, John W., 43 Ways to Finance You Feature Film, 3`d Edition (USA:Southern Illinois University Press), 267-8.sa See http://www.brasil.gov.br/sobre/culture/projects-and-programs/rouanet-law-

1/br model1?set language=en

-15-

The Rounaet law also creates the National Cultural Fund, a grant program administeredby the Ministry of Culture. This fund provides support to "cultural proposals of naturaldemand," or projects that do not fit other specific programs. The fund by its very naturedoes not have any preset criteria for eligibility, and support from it is dispersed at theMinistry's discretion.

Regional Incentives

Additional tax incentives are reportedly available in many Brazilian states and cities, butthere is no readily accessible information on these potential financing resources.However, productions considerin~q Brazil as a potential destination will want to explorethe regional incentives available. 5

Co-Production Agreements

Brazil has film coproduction treaties with Argentina, Canada, France, Germany, Italy,Portugal and Spain. Additionally, Brazil is a party to the Acuerdo Latinoamericano deCoproduccion Cinematografica [the Latin American Agreement on Film Coproduction],66

Co-productions that meet the terms of these agreements then qualify as national films ineach of the countries involved. These co-productions are then eligible for various typesof governmental support, including any tax credits available in each country.

Executive Summary

Name Tax Deductions) Maximum Deduction Other Information

The Audiovisual Law 3% off income tax BRL $3 million Only investments in the form of Audiovisual(approx. USD $1.5 Certificates qualify for the deduction

70%off withholding million)tax on royalties Only investments into projects approved by

ANCINE qualify for the deduction

The Audiovisual Law also provides for anexemption from the CONDECINE tax

The Rouanet Law Up to 40% of cultural 6% of total income tax Sponsorships/donations must only be forsponsorship/donation for individuals projects approved by ANCINE or the Ministryoff income tax of culture

4% of total income taxfor companies The Rouanet law also makes the National

Cultural Fund available for other forms ofinvestment

s5 In addition to the ANCINE website supra note 1, more information is available via the Brazilian Ministry

of Culture's Audiovisual Secretariat: http://www.cultura.gov.br/site/ss

Other signatories include Argentina, Colombia, Cuba, Ecuador, Nicaragua, Panama, Venezuela, Peru,Mexico, and the Dominican Republic. The text of the agreement is available athttp://www.cinelatinoamericano.org/assets/docs/acuerdo bol.pdf

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Croatia

In January, 2012, the Croatian government introduced a cash rebate incentive for filmand television productions made in Croatia.67 This program is administered by theCroatian Audiovisual Centre (HANG), and offers productions a benefit of up to 20% oftheir qualifying expenditures. The maximum rebate available is HRK $20 million68 perproject. In order to qualify for the incentive, a project must meet the minimumexpenditure requirement for the relevant production format:

- HRK $2 million (approximately USD $327K) for feature films;- HRK $300,000 (approximately USD $50K) for documentaries;- HRK $500,000 (approximately USD $81 K) for animated productions;- HRK $1 million (approximately USD $164K) for television movies; or- HRK $750,000 (approximately USD $123K) per television episode.

The project must also pass a cultural test that examines its Croatian cultural content,the creative talent involved, and the locations where production is focused.

In order to access the rebate, a foreign producer must partner with a local Croatianentity: either a Croatian co-producer or production service provider. The local entity thenapplies to HAVC to have the production certified. The local entity is responsible for anyrequirements HAVC may set in relation to a certified production. The rebate is then paidout to the local entity upon the completion of production.

Like Austria and several of the European countries discussed below, Croatia is a partyto the ECCC.69 It also has co-production agreements in place with France, Canada, andGermany. The qualification requirements for these agreements include minimum andmaximum contribution percentages for the co-producers from each country,proportionate revenue sharing, and co-production crediting. Additionally, each co-producer must own a copy of the final negative and hold any necessary reproductionrights.70 All qualified co-productions are fully eligible to take advantage of all incentivesavailable in both countries.

Executive Summary

Name Form Amount Minimum Expenditure Other Requirements

Cash Rebate for Film Cash rebate Up to 20% of qualifying HRK $2 million for feature films Production must passand Television local expenditure (approx. USD $327K); cultural testProduction Up to a maximum of HRK $300,000 for documentaries Production must be for

HRK $20 million (approx. USD $50K); an approved format(approx. USD $3.2 HRK $500,000 for animated (see minimummillion) productions (approx. USD $81 K); expenditure categories)

HRK $1 million for television Applicant must be a

movies (approx. USD 164K); or local Croatian entity

HRK $750,000 per televisionepisode (approx. USD $123K)

67 For more information visithttp://www.havc.hr/filminincroatia en.php?menu id=14&sm id=47&son=1&filmx=°° Approximately USD $3.2 million.69 Please refer to the section on Austria for all information on the ECCC.70 For an example see Article 6 of the co-production agreement between Canada and Croatia, availableat: http://www.telefilm.ca/en/coproductions/coproductions/agreements

~r~

Czech Republic

The Czech Film Commission (CFC) administers an initiative known as the Film IndustrySupport Program (FISP)." Under this program, the CFC offers a cash rebate for up to20% of the qualifying local expenditure and 10% on the international expenditure72 for aproduction. The rebate can cover for local expenditure on up to 80% of the totalproduction budget. FISP is available for feature, animated, and documentary films thatare at least 70 minutes long, and television episodes that last at least 40 minutes.Rebates are issued to approved projects at the end of their production schedule. In2012 the programme's budget is CZK $300 million.73

In order to qualify for FISP, productions must pass a cultural test that examines theproject's Czech/European cultural content, the nationalities of the creative talentsinvolved, and the locations where filming/production took place. Additionally the projectmust meet a minimum local expenditure requirement based on its format: CZK $15million74 for feature films, CZK $10 million75 for each television episode, and CZK $3million76 for documentaries.

The Czech Republic is a party to the ECCC. Additionally, Canada has a co-productionagreement with the former Czechoslovakia, and this treaty may continue to be in effectwith the Czech Republic." The qualification requirements for this agreement includeminimum and maximum contribution percentages for the co-producers from eachcountry, proportionate revenue sharing, and co-production crediting. Additionally, eachco-producer must own a copy of the final negative and hold any necessary reproductionrights.'$ All qualified co-productions are fully eligible to take advantage of all incentivesavailable in both countries.

Executive Summary


Film Industry Cash rebate Up to 20°/a of qualifying CZK $15 million for feature films Feature, animated, andSupport Program local production (approx. USD $728K) documentary films must

expenditure be at least 70 minutesCZK $10 million for each television long, television episodes

Up to 10% of international episode (approx. USD $485K) must be at least 40production expenditure

CZK $3 million for documentaries minutes Ion gUp to a max of 80% of the (approx. USD $146K) Applicant productionstotal production budget must pass a cultural test

" See http://www.filmcommission.cz/guidelines/incentives orhtt :/p /www.ppfpen.cz/clanky/programme.html~~This includes costs on wages for employees who pay a withholding tax in the Czech Republic but donot pay Czech income taxes.73 Approximately USD $14.5 million.74 Approximately USD $728K.75 Approximately USD $485K.76 Approximately USD $146K."The Telefilm Canada page on international co-production treaties implies the agreement continues tobe in effect.'$ Please see Article VII of the co-production agreement between Canada and Czechoslovakia, availableunder the "Czech Republic" link at: http://www.telefilm.ca/en/coproductions/coproductions/agreements

Dominican Republic

Under its recent Law No 108-10,79 the Dominican Republic (DR) seeks to supportdomestic film and television productions80 and attract international investment byoffering a variety of incentive programs. These are administered by the General FilmOffice (DGCINE), an agency under the Ministry of Culture. DGCINE manages theDominican System of Cinematographic Information and Registry (SIRECINE), and anyprojects that wish to take advantage of the incentives available in the DR must begin byregistering with SIRECINE.

DGCINE's primary resource for supporting and promoting domestic productions is theCinematographic Promotion Fund (FONPROCINE). This fund is available to theproducers of national film and television productions, although no more than 70% of theDominican budget for any one project can come from FONPROCINE.

International productions can benefit from a number of incentives available in the DR,provided they meet certain requirements. Each foreign production seeking financialsupport must be at least partially produced in the DR, and must employ a minimumnumber of native Dominicans in the production.$' Additionally each production musthave third party liability insurance and a DGCINE administered filming permit.Additionally, international co-productions must spend a minimum of 20% of their budgetin the DR.

Companies that invest in feature-length productions are able to deduct 100% of theiractual invested value from their income tax. However this amount cannot exceed 25%of the taxes that company is subject to in a given fiscal period. In order to be eligible forthis incentive a company must be taxable in the DR.

Companies that produce domestic or foreign audiovisual works can benefit from a taxcredit for up to 25% of their production expenditure in the DR. These credits are fullytransferrable, and can be used against the company's annual income tax. However, inorder to access this tax credit the applicant company must spend at least USD$500,000 in the DR. Additionally any goods or equipment needed to complete theproduction may be freely imported into the country for an extendable term of six months.

The Dominican Republic is also a party to the Acuerdo Latinoamericano deCoproduccion Cinematografica (the Latin American Agreement on Film Coproduction).82Co-productions that meet the terms of this agreement qualify as national films in each ofthe countries involved. These co-productions are then eligible for various types ofgovernmental support, including any tax credits available in each country.

79 The Law for the Development of Film Activity in the Dominican Republic, available athttp://www.dgcine.gob.do/index.php/law-for-the-development-of-film-activity.html

Th~6 e incentives available in the DR are available to film, television, documentaries, soap opera, andmusic video productions.81 The minimum participation by DR residents /natives ranges from 10-25°/o. However this requirementmay be waived or reduced by the DGCINE in certain circumstances.82 Other signatories include Argentina, Brazil, Colombia, Cuba, Ecuador, Nicaragua, Panama, Venezuela,Peru, Mexico, and the United States. The text of the agreement is available athttp://www.cinelatinoamericano.org/assets/docs/acuerdo bol.pdf

-19-

Executive Summary


FONPROCINE Cash grant No more than 70% of N/A Production must bebudget registered with

SIRECINE

Investor tax Income tax exemption 100%, but amount N/A Production must be atexemption claimed cannot exceed least partially produced

25% of total taxes in in the DRthat fiscal period

Production must

Producer tax credit Fully transferable tax 25% USD $500,000 employ a minimum

credit number of Dominicanworkers

Production must havethird party liabilityinsurance

Production mustreceive a filing permitfrom the DGCINE

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Eurimages

Eurimages is a fund administered by the Council of Europe to support Europeancinematographic works.83 It provides funding for the co-production, distribution, andexhibition of European films. Financing from Eurimages is available to co-productionsthat originate from the fund's 36 member states.84

Eurimages support comes in the form of a conditionally repayable, interest-freeloan.85 The amount may not exceed the lesser of 17% of the total production cost or€700,000.

The fund is only available to European producers, which can be natural or legalpersons. These entities must be governed by the laws of a Eurimages member state, orprimarily owned by nationals of such a state.

In order to be eligible for funding from Eurimages there must be at least two co-producers from different member states involved with a project. Each of these co-producers must contribute at least 20% of the production's total financing, but no morethan 80%.86 Additional co-producers from non-member states are allowed, but theircontribution must not exceed 30% of the project's total financing. Each of the co-producers must jointly own the final negative. Each co-producer must also have at least50% of their financing confirmed at the time of application.

Applications must be submitted within six months, but prior to the beginning of principalphotography. Additionally the production must be for a feature or animated film ordocumentary that is at least 70 minutes long. Finally, the production must pass acultural test that examines the nationalities of those involved in the production.$'

83 For more information visit http://www.coe.inUUdg4/eurimages/default en.asp84 Members include Austria, Belgium, Croatia, the Czech Republic, France, Germany, Iceland, Ireland,Luxembourg, the Netherland, and Norway. For more information visithttp://www.coe.int/t/dq4/eurimages/About/MemberStates en.aspThis form of support is also referred to as a refundable advance on receipts for the production.

86 If the total production budget exceeds €5 million then a majority co-producer can contribute up to 90%of the project's financing. Additionally, if there are three or more co-producers involved then each mustcontribute at least 10%and no more than 70% of the production budget.87 For more information see section 1.6 of the regulations for co-production support, available athttp://www.coe.int/t/dg4/eurimages/Source/Regulations/RequlationsCoprod2012 EN.pdf

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Executive Summary

Name Form Amount Available To Additional Criteria

Eurimages — A conditionally Up to the lesser of European producers, For a bilateral production, each co-European Cinema repayable, interest- 17% of the total legal or natural producer's contribution to the totalSupport Fund free loan /advance production cost or financing must be at least 20% but not

on receipts €700K Each production must exceed 80%, unless the budget ishave at least two co- greater than €5 million in which case aproducers from majority co-producer may contributedifferent Eurimages up to 90%member states

For multilateral productions, each co-producer's contribution to the totalfinancing must be at least 10% but notexceed 70%

Each co-producer must have 50% oftheir financing confirmed at the time ofapplication

Applications must be made during pre-production and within six months ofprincipal photography

Production must be for an eligibleformat

Production must be 70 minutes long

Productions must pass a cultural test

-22-

Fiji

Film and television incentives in Fiji are administered by the Fiji Audio VisualCommission (FANG), an official government agency tasked with promoting anddeveloping the local audio visual industry.$$ FAVC offers a number of incentiveprograms to fulfil its mandate, including a cash rebate and tax exemption.

Film Making Incentive

Foreign production companies operating in Fiji can apply to the FAVC for a complete orpartial exemption from taxes on the income of foreign employees working in Fiji on theforeign production. The exemption is not based on local expenditure and is available toany foreign film or television productions operating in Fiji.

Film Tax Rebate

The FAVC also offers a cash rebate of up to 47% of the Qualifying Fiji ProductionExpenditure (QFPE). This rebate can be applied for after a production has beenconcluded. The maximum amount available under this rebate is FJD $11.75 million.89The rebate can be claimed by any production company that pays income taxes in Fiji.

In order to qualify for the rebate, the production must be for a feature, short, television,or documentary film. The production cannot portray Fiji in a negative light, and musthave a QFPE of at least FJD $250,000.90 The production must also engage the citizensof Fiji and utilise a specialized local production institution, such as the Film School at FijiNational University.

Executive Summary


Film Making Incentive Tax exemption on Complete or partial N/A N/Aincome of non-Fijiproduction employees

Film Tax Rebate Cash rebate 47% of QFPE FJD $250K Production must beUp to FJ $11.75 million (approx. USD $140K) concluded

Production must portrayFiji in a positive light

Production mustengage citizens of Fijiand a specialized localproduction institute

88 For more information visit http://www.fijiaudiovisual.com/pages.cfm/incentives/89 Approximately USD $6.6 million.90 Approximately USD $140K.

-23-

France

The Centre National du Cinema et de L'Image Animee (CNC) offers a Tax Rebate forInternational Production (TRIP) incentive to support foreign productions that are at leastpartly made in France. The CNC is an administrative agency under the Ministry ofCulture and Communication.

The amount offered under TRIP is 20% of the production expenses incurred in France.The types of expenses that are eligible include compensation for French/Europeanworkers, technical expenses, costs for French production services/facilities, andtransportation and catering services related to the production. The minimum productionexpenditure required to be eligible for the incentive is €1 million,91 and the maximumamount that may be claimed for a single project is €4 million.92

TRIP is available to French production companies managing the co-production inFrance. In order to be eligible for this role, a company must be subject to corporateincome tax in France and act as line producer for the sequences produced in France.The French production company must also sign a co-production agreement with theforeign producer(s).

In order to be eligible for TRIP, a production must meet certain criteria. The productionmust be for an eligible format,93 must not receive any other financial support from theCNC, must not be pornographic or promote violence, and must pass a cultural test. Thistest analyzes various elements of the production such as its setting, language,characters, plot, the nationalities of the filmmakers, the locations used, and the degreeof French production.94 For animated productions, there is a separate cultural test thatfocuses much more on the use of French production facilities. Live action productionsthat feature a significant proportion of visual effects shots may apply to be subject to theanimation cultural test as opposed to the live action test. 95 Additionally, live actionprojects must shoot in France for a minimum of five days.s6

Any projects that benefit from TRIP must credit the incentive in either the beginning orend credits of the final production.

91 If the production is a television series then it is possible to aggregate the costs of several episodes toreach the €1 million minimum expenditure. €1 million is approximately USD 1.2 million.92 Approximately USD $4.9 million.93 This includes live action films, television movies (either stand-alone or as part of a series), andanimated productions. Live action documentaries are among those formats explicitly denied eligiblty.94 Neither this test nor the animation cultural test require there be French control over the copyright orcreative direction of a project.95 A "significant proportion" of visual effects shots means at least 25% of the shots, or an average of twoand a half shots per minute, must be digitally processed to either add characters, visual elements orobjects involved in the action, or to modify the rendering of the scene or the camera's point of view.96 Live action projects that are subject to the animation cultural test do not need to shoot in France for aminimum of five days.

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lle de France

The Ile de France region also offers a Support Fund for Film and AudiovisualTechnical Industries. This fund offers a cash grant to qualifying productions operatingwithin the region, including those in Paris. This incentive is available for productions offilm, television, documentary, and animated projects.97 In order to be eligible for thefund, a production must spend at least 20 days or conduct 50% of its shoot in the Ile deFrance region, and must complete at least two of the following types of technicalservices in Ile de France:98

- Locations and costumes

- Technical resources

- Editing and sound

- Post-production

The amount available from the fund varies depending on the format of the production:

- Films are eligible for up to €560,00099

- Animated works are eligible for up to €400,000~oo

- Documentaries are eligible for up to €90,000~o~

- Television productions are eligible for up to €150,000102 for a single program, orup to €400,000103 for an entire series


France is also party to the ECCC and has many bi-lateral co-production agreements inplace, including five with Canada.'oa

97 Film and documentary projects are required to be at least 60 minutes long, while each episode oftelevision projects must be at least 26 minutes in length.98 A technical service is deemed to have been completed in the Ile de France region when 80% of theproduction expenditure on that technical services is incurred within the Ile de France region.9 Approximately USD $691 Kgoo

Approximately USD $493K101 Approximately USD $111 K102 Approximately USD $185K'03 Approximately USD $493K,oa

France has separate agreements and mini-agreements in place with Canada relating to the productionof film and television projects, the development of French language television projects, and the promotionof co-produced projects. For more information on France's international co-production agreements, visithttp://www.cnc.fr/web/en/co-prod uction-agreement

-25-

Executive Summary

Name Format Amount Minimum QualifyingExpenditure


Tax Rebate for Cash rebate 20% of qualifying €1 million (approx. Yes, separate Available to FrenchInternational expenditure in France, USD $1.2 million) tests for live production companiesProduction up to a maximum claim action and acting as line producers

of €4 million (approx. animatedUSD $4.9 million) projects Production must be for an

eligible format

Production must notreceive any other financialsupport from the CNC

Live action projects mustshoot in France for atleast five days

Benefiting productionsmust credit TRIP

Ile de France Cash grant Up to €560,000 for N/A No Productions must spendRegion films (approx. USD at least 20 days orSupport Fund $691 K) conduct 50% of its shootfor Film and in the Ile de France regionAudiovisual Up to €400,000 for

Technical animated productions

Productions (approx. USD $493K)Productions must

Up to €90,000 for complete at least two ofdocumentaries the following types of(approx. USD $111 K) technical services in the

Up to €150,000 foraregion:

single television i) Locations and costumesprogram (approx. USD$185K) ii) Technical resources

Up to €400,000 fora iii) Editing and sound

television series iv) Post-production(approx. USD $493K)

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Germany

The German Federal Film Fund (DFFF)105 offers a cash grant incentive program for filmproductions in Germany. The DFFF is available to producers that are residents of, orcarry on business in, Germany or another member state of the European EconomicArea (EEA).'o6 ~o~ However, in order to be eligible to apply a producer must haveproduced at least one feature-length film in Germany or another EU or EEA memberstate within the preceding five year period.108 The applicant producer must apply for theDFFF grant before shooting or animation begins.

In order to be eligible for a grant from the DFFF, an applicant film must meet certaincriteria. The film must be a feature film, documentary, or animated film, and must meetminimum total production cost and running time requirements depending on itsformat.109 There must be at least one final version produced in German,10 and the film'scontents must not be inappropriate.~~~ The film must also be commercially released inGermany within one year of completion.~12 Finally, the film must pass a German culturaltest relevant to its format. The cultural tests under the DFFF focus on cultural content,the nationalities of the creative talent, and the production facilities utilized. Thesecultural tests do not require German creative control or copyright ownership.

The DFFF offers a cash grant for 20% of the qualifying expenditure within Germany~113

up to a maximum of 80% of the total production costs. The maximum grant generallyavailable for a single film project under the DFFF is €4 million."a However, a grant of

'05 All references in this section to the "Guideline" refer to the Guideline Issued by the FederalGovernment Commissioner for Culture and Media: "Incentive to Strengthen the Film Industry inGermany," 23 December 2009, available athttp://www.ffa.de/content dfff/dfff leitfaden.phtml?lanquage=en

The EEA is a single market that includes all 27 members states of the European Union, as well asthree European Free Trade Association member states — Iceland, Liechtenstein, and Norway. For moreinformation on the EEA please visit h~://www.efta.int/eea/eea-agreement.aspx107 If the applicant producer is a resident of or carries on business in another EEA member state, thenthey must also have a business establishment within Germany.Boa This "reference film" must have been commercially released in German theatres, in at least 30 printsor 15 prints if the production budget did not exceed €2 million.109 The minimum running time requirements are 79 minutes for feature-length films and 59 minutes forchildren's films. The minimum total production cost requirements are: €1 million for feature films(approximately USD $1.2 million); €2 million for animated films (approximately USD $2.5 million); and€200K for documentaries (approximately USD $246K)"o Subtitles will suffice to meet this requirement."' The contents of the film may not violate the German Constitution or any laws in force in the FederalRepublic of Germany, or "moral or religious feelings." The film may not contain any sexual matters orbrutalities in a "garishly coarse, speculative manner." See §5 paragraph (4) of the DFFF Guidelines,available at http://www.ffa.de/start/download.php?file=dfff/richtlinie/DEEP-Richtlinie en.pdf12 For more information on the commercial release requirements, see Section 6 of the Guideline.13 In some situations, the cost of on-location shooting outside Germany may be counted as Germanexpenditure. for more information see Section 14 paragraph 6 of the Guideline."a Approximately USD $4.9 million.

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€10 million115 may be given if the German production expenditure accounts for at least35% of the total production cost, or if the film scores highly on the cultural test.116

Germany is also a party to the ECCC, as well as a number of bilateral co-productionagreements. The terms of these agreement generally stipulate that qualifying co-productions will be eligible for the incentives available in each country including theDFFF. However, the DFFF specifies that in order for such a co-production to be eligiblethe applicant German co-producer must financially contribute at least 20% of the totalproduction cost.~~~ Additionally the German co-producer's contribution cannot be purelyfinancial, rather they must be responsible for the content or actively involved in the film'sproduction.

Executive Summary

Name Format Amount Minimum TotalProduction Cost

Minimum GermanExpenditure

CulturalTest

Other Requirements

German Cash 20% of qualifying €1 million for 25% of total Yes Applicant producer mustFederal grant expenditure in feature films production cost be resident of GermanyFilm Fund Germany, up to a (approx. USD $1.2 or other EEA state

maximum of 80% million) 20% if total production

of the total cost exceeds €20 Applicant producer must

production €2 million for million (approx. USD have produced a

budget animated films $25 million) feature-length film that(approx. USD $2.5 was commerciallymillion) N/A if German released in Germany

expenditure exceeds within the previous five€4 million €200K for €15 million (approx. yearsmaximum grant. documentaries USD $18.4 million)€10 million if (approx. USD The film must beGerman $246K) commercially released inexpenditure is Germany within one year35% or more of of completiontotal productioncost, or if cultural The film must be an

test criteria are appropriate format and

met length

15 Approximately USD $12.3 million."s See Section 14 paragraph 5 of the Guideline for more information."' However, if the total production costs exceed €25 million (approximately USD $30.7 million) then acontribution of €5 million (approximately USD $6.15 million) will suffice.

~~:~

Iceland

The government of Iceland provides a film production incentive via Act No 43/1999 onTemporary Reimbursements in Respect of Film Making.~~$ The program is administeredby the Ministry of Industry, and allows for a reimbursement of 20% of the productioncosts incurred in Iceland. Additionally, if more than 80% of the total production budgetwas expended in Iceland, then the reimbursement will be for 20% of all productionexpenditure within the European Economic Area (EEA).19

Only Icelandic companies, or Icelandic branches of companies from other EEA memberstates, may apply for the incentive. Applications must be submitted to the Ministry ofIndustry prior to the commencement of production. The only production costs that maybe claimed for reimbursement are those that are incurred in Iceland and are subject toIcelandic tax law.

The Ministry of Industry has the discretion to choose whether a production is eligible forthe incentive. In making this determination, the Ministry considers factors such as:

- The role of Icelandic culture, history, or nature in the production;

- The degree to which the production promotes the filmmakers' experience,knowledge, and artistic ambitions;

- The degree to which domestic Icelandic parties share in the production;

- The production's planned costs and sources of funding, both speculative andconfirmed;

- The content of the production, as indicated by materials such as the script ofplanned filming locations; and

- The production's distribution arrangements

Iceland is a party to the ECCC, and also has a bilateral co-production agreement inplace with Canada. The qualification requirements for the agreement with Canadainclude minimum and maximum contribution percentages for the co-producers fromeach country, proportionate revenue sharing, and co-production crediting. Additionally,each co-producer must own a copy of the final negative and hold any necessaryreproduction rights.120 All qualified co-productions are fully eligible to take advantage ofall incentives available in both countries.

"$ An English translation of the Act is available at http://filminiceland.com/Incentives/Act-on-Reimbursement/

The EEA is a single market that includes all 27 members states of the European Union, as well asthree European Free Trade Association member states — Iceland, Liechtenstein, and Norway. For moreinformation on the EEA please visit http://www.efta.int/eea/eea-agreement.aspx,zo Please see Article VIII of the co-production agreement between Canada and Iceland, available at:http://www.telefilm.ca/en/coproductions/coproductions/agreements

-29-

Executive Summary

Name /OriginEligibleEntities

AmountMinimumExpenditure


Act No 43/1999 Icelandic 20% of production N/A Cultural factors play Eligibility is determinedon Temporary companies / expenditure in Iceland a role in the Ministry via a discretionaryReimbursements Icelandic of Industry's choice by the Ministry ofin Respect of branches of ~R discretionary choice Industry. This choice isFilm Making, companies 20% of all production regarding eligibility based on factors such asadministered by from the EEA expenditure in the the filmmakers involved,the Ministry of EEA if more than 800~o the cost and sources ofIndustry of the total production funding, distribution

budget was expended arrangements, the

in Iceland content, and theIcelandic share in theproduction.

-30-

Ireland

In Ireland, Section 481 of the Taxes Consolidation Act 1997 provides tax relief for filmand television productions made in Ireland.12' The incentive comes in the form of a taxcredit that is calculated according to the qualifying expenditure, or the cost of goodsand services purchased in Ireland and of all EU personnel working in Ireland. Themaximum qualifying expenditure that may be claimed for a single production is €50million,122 and this total can account for up to 80% of the total budget for the project.~z3

The tax credit can be worth up to 28% of the qualifying expenditure.

The incentive is administered by the office of the Revenue Commissioners, and must beapplied for at the outset of production. The tax credit is only available to Irishproducers, though foreign projects can access the incentive by partnering with an Irishco-producer. All projects that apply for the Section 481 tax credit must also pass acultural test overseen by the Department of Arts, Sport and Tourism.124

Ireland is a party to the ECCC, and also has bilateral co-production agreements in placewith Canada, Australia, and New Zealand. Any productions that meet the requirementsof these co-production agreements qualify as national films of both countries andbecome eligible for all relevant tax incentives. These co-production agreementsgenerally require a balance between the financial and creative contributions of eachcountry involved. Ireland's agreements with Canada and Australia furthermore requirethat each co-producer be entitled to ownership and reproduction rights for a copy of thefinal negative. Contrastingly, the agreement with New Zealand allows the co-producersto make a contractual agreement as to the intellectual property rights associated withthe project.125

Executive Summary

Name Form Minimum Spend Amount Limitations Cultural Test

Qualifyingexpenditure

Section 481 of the 28°/o of qualifying cannot exceedTaxes Conso/idation Tax credit No expenditure in 80% of global YesAct 1997 (as amended) Ireland budget, or €50

million (approx.USD $61.5 million)

12' The incentive is available for Feature Film, Television Drama, feature and television Animation, andCreative Documentary projects.'22

Approximately USD $61.5 million.'23

See the Irish Film Board's website for more information:ihttp://www.irishfilmboard.ie/financing your film/Section 481/5

The test analyzes various elements of the project including its language, screenplay or textual basis,storyline or underlying material, any cultural/historical/social issues relevant to the people of Ireland, etc.For more information please visithttp://www.irishfilmboard.ie/financing your film/Section 481 Cultural Test/29~~ To view these co-production agreements, and for more information on co-productions with Irelandgenerally, please visit: http://www.irishfilmboard.ie/financing your film/International Coproduction/10

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Israel

The Israeli Law for the Encouragement of the Production of Films is aimed to attractforeign productions to Israel. The law creates a program that is jointly administered bythe Ministry of Finance and the Ministry of Industry Trade and Labor. This incentiveprogram is available in two models: the Foreign Production Model (FPM) and the Co-Production Model (CPM). Under each of these models, the benefit offered by the Israeligovernment is a 20% cost reduction via tax benefits.

Additionally, the Jerusalem Film and Television Fund (JFTF) offers support tointernational productions shooting in the city of Jerusalem. The JFTF is an investmentfund administered by the Jerusalem Development Authority (JDA), a municipalcorporation under the authority of the Ministry of Finance.

The Foreign Production Model

The FPM is intended for foreign film or television makers who engage the services of anIsraeli production company (IPC) while working in Israel. IPCs in these circumstancemay retain 17% of their total tax payments before Israel's Value Added Tax (VAT) isapplied. After VAT is incorporated, this benefit amounts to a total tax savings of 19.6%for the IPC. In order to qualify for the benefit, a foreign production company simplyneeds to have an IPC purchase all Israeli goods and services associated with theproduction on its behalf. This incentive is only available for projects with a localexpenditure of at least ILS $8 million.12s

The Co-Production Model

An alternative to the FPM is the CPM, which is intended for Israeli co-producers workingwith foreign co-financiers. The savings available under the CPM vary depending on theIsraeli co-producer's contribution to the overall production budget.

In situations where the contribution by the foreign investors) exceeds 75% of thebudget, the Israeli co-producer will be entitled to withhold 13% of pre-VAT taxes onmost local goods and services expenditures. After the VAT, is applied this savingsamounts to a 15% total savings in tax costs. Alternatively, in situations where thecontribution by the foreign investors) is between 50-75 °/o of the budget, the Israeli co-producerwill only be able to withhold 9% of pre-VAT taxes. After VAT is applied, thiswill amount to a total tax savings of about 10.4%.

In order to qualify for this benefit, the total production expenditure in Israel, minus 85%of any investment in the production by Israeli residents, must exceed ILS $4 million.127

'z6 Approximately USD $2 million.

127 Approximately USD $1 million.

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The Jerusalem Film and Television Fund

The JFTF is available in addition to the tax reductions described above, and offersinternational productions a cash investment of up to ILS $1.6 million.128 Theseinvestments are distributed at the JDA's discretion on the basis of the following criteria:

1) The role and depiction of Jerusalem in the screenplay;

2) The quality of the production proposal (in terms of both content and thecreative team involved); and

3) The production expenditure in Jerusalem

The JFTF is available to international film and television productions that are receivingmost of their financing from non-Israeli sources. It is aimed at proven filmmakers asopposed to u~ and comers.129 At least 10% of the production must be set inJerusalem,'3 and at least 10% of the shooting schedule must take place in Jerusalem.Additionally, at least 25% of the total production expenditure in Israel must be allocatedto Jerusalem.13'

Terror Attacks Insurance

In light of concerns over violence and terrorism, many domestic and internationalproductions that are set in Jerusalem have elected not to film on location in Israel. TheIsraeli Government has recently begun offering terror attack insurance to internationalproductions in attempt to coax them to film in Jerusalem.132

Co-Production Agreement

Israel has co-production agreements in place with Canada and the UK. The qualificationrequirements for these agreements include minimum and maximum contributionpercentages for the co-producers from each country, proportionate revenue sharing,and co-production crediting. Additionally, each co-producer must own a copy of the finalnegative and hold any necessary reproduction rights.133 All qualified co-productions arefully eligible to take advantage of all incentives available in both countries.

128 Approximately USD $400,000.t29 For example, the mayor of Jerusalem recently approached Woody Allen about shooting in Jerusalem:http://news. vahoo.com/forget-manhattan-try-ierusalem-Israel-tells-woody-154626612. html

It is not clear whether this figure is specific to the initial proposal or the finished product.131 For more information on the availability of the JFTF to international production, please visit:htt ://www.jerusalemfilmfund.com/EnPage.aspx?Id=311i~ For more information see reports in The Hollywood Reporter and The Location Guide:http://www. hollvwoodreporter.com/news/Israel-offers-incentives-lure-filmmaking-228975http://www.thelocationquide.com/bloq/2011/09/terror-insurance-designed-to-encourage-Israel-location-shoots/~ e for example Article VII of the co-production agreement between Canada and Israel, available at:http://www.telefilm.ca/en/coproductions/coproductions/agreements

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Executive Summary


Foreign Production 17% before VAT, ILS $8 million All expenditure must beModel 19.6% total savings (approx. USD $2 million) incurred by an Israeli

production company

Co-Production Model If Israeli co-producer's Total production Only the Israeli co-producercontribution is >75%, expenditure in Israel is eligible for this savings.

Tax cost reduction 13% before VAT, 15% minus 85% oftotal savings investment by resident

Israelis must exceed ILSIf Israeli co-producer's $4 million (approx. USDcontribution is <75%, $1 million)9% before VAT,10.4% total savings

Jerusalem Film and Cash investment Discretionary amount N/A, but at least 25% of At least 10% of theTelevision Fund of up to ILS $1.6 the production production must be set in

million expenditure in Israel Jerusalem(approx. USD $400K) must be specific to

Jerusalem At least 10% of the filmingmust take place inJerusalem

Amounts are determinedbased on the followingcriteria:

1) The role and depiction ofJerusalem in thescreenplay

2) The quality of theproduction proposal (interms of both content andthe creative team involved)

3) The productionexpenditure in Jerusalem

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Italy

Italian Tax Credit for Foreign Films13a

Italy offers a national film production incentive that is administered by the Italian TradeCommission (ITC). The incentive is a tax credit for up to 25% of the production costsincurred in Italy. The maximum amount available under this program is the lesser of €5million135 or 60% of the total production budget.~36 The credit is available to foreignproducers but they must partner with a local Italian production/executive productioncompany.

Only productions of films primarily intended for theatrical release qualify for theincentive. Additionally, applicant projects must pass a test that looks to the production'scultural content, creative and technical talent. As part of this test, productions must fulfilat least two of the following requirements:

a) Be adapted from a literary work; orb) Relate to a historical, cultural, religious, social, or cultural event; orc) Concern a celebrity of historical, cultural, religious, social, or culturalimportance; and/ord) Be set in Italy or Europe

Italy is also a party to the ECCC, and has numerous co-production agreements inplace with countries such as Argentina, Australia, Canada, Germany, NewZealand, Poland, and the UK. The qualification requirements for the agreementwith Canada include minimum and maximum contribution percentages for the co-producers from each country, proportionate revenue sharing, and co-productioncrediting. Additionally, each co-producer must own a copy of the final negativeand hold any necessary reproduction rights.137 All qualified co-productions arefully eligible to take advantage of all incentives available in both countries.

'3a See http://www.cinema.beniculturali.it/ for more information.'3s Approximately USD $6.5 million.'36 For difficult and low budget project, the maximum amount can be up to 80% of the total productionbudget. Low budget films are those with a total production budget of less than €1.5 million, and difficultfilms refers to directors' first and second features, short films, documentaries, or film that score highly onthe creative section of the cultural test.137 Please see Article 6 of the co-production agreement between Canada and Italy, available at:http://www.telefilm.ca/en/coproductions/coproductions/agreements

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Executive Summary

Name Form Amount Cultural Test Other Requirements

Italian Tax Credit Tax credit 25°/o of Italian Yes Only Italian production /for Foreign Films production costs, up to executive production companies

a max of 60% of the The film must meet at least can applytotal production budget two of these requirements:

or €5 million (approx. a) be adapted from a

USD $6.5 million) literary workb) relate to a historical,

Max of 80% of the total cultural, religious, social, orcost for difficult or low cultural eventbudget projects c) relate to a celebrity

d) be set in Italy or EuropeLow budget =total costis €1.5 million (approx.USD $1.85 million) orless

Difficult =first andsecond feature films,short films,documentaries, highscore on creativesection of cultural test

Italian Regional Incentives

In addition to the national tax credit, there are also funds available from variousregional film commissions throughout Italy. These regional incentives can becombined with the national tax credit to create an additional savings forproductions made in Italy.

Aosta Valley13s

The Aosta Valley Film Commission offers four incentives to local and foreignproductions that promote the region. These incentives are offered as cash grants, andeach are aimed at specific types of productions: film and television, documentary and"first works,"139 those with particular artistic and economic value,140 and those seekingpost-production and distribution support.

Applications for these funds must be submitted prior to filing, and must include detaileda detailed budget for the project. In order to be eligible a production must meet acultural test that looks to criteria such as references to the Aosta Valley, the economicimpact on the region, the cultural and artistic value of the project, and the production'soverall prospects for success.14~ The amounts provided under each of the funds ranges

138 For more information visit http://www.filmcommission.vda.it/139 ,First works" refers to fictional and animated films exceeding 60 minutes in length that are intended fortheatrical release. This title also presumably indicates that qualifying productions must be the first majorrelease by the director, although this is not specifically indicated in the English guidelines.,ao This is determined at the discretion of the Aosta Valley Film Commission.14' The actual criteria vary slightly between each of the funds. Additionally there is no such test applicablefor the fund supporting documentary and "first works" productions. Please see the executive summarybelow, and the guidelines for the funds at:http://www.filmcommission.vda.it/immagini/file/21122011011339REGOLAMENTOFILMFUND ENG1.pdf

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from €20,000 — €180,000,142 and in each case will not exceed 50% of the totalproduction cost. Each of the funds also requires that the production spend at least150% of the amount of support provided within the Aosta Valley region.

Apulia

The Apulia Film Commission offers an Apulia Film Fund to support the pre-production,production, and post-production of audiovisual projects within the Apulia region.143 Theincentive is available to any entities involved in a qualifying production, though theCommission's guidelines state that it is particularly interested in national andinternational co-productions.'aa The fund offers a cash grant and is available forproductions of feature-length fiction films, television movies, television series,documentaries, fiction short films, video clips, video games, and animated films. In orderto be eligible for the fund, a project must meet the following requirements:

- At least 35% of the cast and crew must be Apulian residents

- At least 200% of the amount awarded must be spent in the Apulia region~a5

- For feature films, television movies and television series, at least three weeks offilming of the first reel must take place on Apulian soil'a6

- For documentaries, at least two weeks of filming of the first reel must take placeon Apulian soil

- For short films, at least four days of filming of the first reel must take place onApulian soil

The amount of funding available varies depending on the production's format: featurefilms, TV movies, and TV series are eligible for up to €150,000,147 documentaries areeligible for up to €40,000,148 short films and video clips are eligible for up to €30,000~~49and video games are eligible for up to €15,000.50 The total funding for a single projectcannot exceed 50% of its total production cost, except in the cases of complex films orthose with limited financial resources. Additionally, applicant productions are evaluatedaccording to criteria that vary for each format. Generally these evaluations look theartistic quality of the project's content, its technical quality, the project's economicimpact on the region, the artistic contributions of the principal creative talent, and theproject's other sources of funding.

'a2 Approximately USD $25,000 — $221,000.'a3 For more information visit http://en.apuliafilmcommission.it/funds/apulia-national-film-fund,aa

See section 1 in Apulia Film Fund regulation, available at http://www.apuliafilmcommission.ibcros-u~load/apulia film fund regulations 21 4 11.pdf~ For animated films and video games this total rises to 300%

gas This requirement rises to four weeks if the production also receives support from the Hospitality Fund,as discussed below147 Approximately USD $185K148 Approximately USD $49K149 Approximately USD $37K,so Approximately USD $18K

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The Apulia Film Commission has also recently begun offering the Apulia InternationalFilm Fund to attract international audiovisual productions to the region.15' The fund isavailable to Italian production companies acting as co- or executive producers oninternational projects for feature-length fiction films, television films, and televisionseries. The fund offers a reimbursement for up to 15% of the below the line productioncosts incurred in Apulia, up to a maximum of €200,000.152 However, the amounting offunding provided may not exceed 50% of the total production cost for a project. In orderto be admissible a production must have a distribution contract in place in the country oforigin for the majority production company. Additionally the Italian co- or executiveproducing company must have completed at least one previous international co-production.

The Apulia Film Commission also offers a Hospitality Fund153 that can be combinedwith either the Apulia Film Fund or the Apulia International Film Fund. The HospitalityFund is intended to help Italian production companies cover the costs of services likeaccommodation, board, and transportation. It offers grants of up to €100,000154 forfeature films, television films, and television series, up to €20,000155 for documentaries,and up to €15,000156 for short films and video clips. Productions that receive supportfrom the Hospitality Fund are required to spend at least 150% of the amount received inthe Apulia region. Applicant productions will be assessed for eligibility based on anumber of criteria including:

- The artistic quality of the project

- The production's feasibility

- The resultant economic impact on the Apulia region

- The length of production within Apulia

- The number of Apulian personnel used in the production

- The project's distribution plan

- The visibility of Apulian locations within the production

Friuli Venezia Giulia 57

The Friuli Venezia Giulia (FVG) Film Commission offers a film fund to supportproductions that are shot within the region. The incentive is available to foreignproduction companies making feature film, television dramas, animated films, shortfilms, documentaries, and music videos. It offers a cash grant that varies in sizedepending on the amount of time spent filming in the FVG region:

- A grant of €150,000158 is available to productions that spend at least 35 daysshooting in the FVG region

15' The Apulia Film Commission enacted the fun on March 14, 2012. For more information visithttp://en.apuliafilmcommission.it/funds/apulia-international-film-fund~ Approximately USD $246K,53

For more information visit http://en.apuliafilmcommission.it/funds/apulia-hospitality-fundAsa Approximately USD $123Kass

Approximately USD $25Kass

Approximately USD $18K157 For more information visit http://www.fvgfilmcommission.com/en/film-fund

~~:~

A grant of €70,000159 is available to productions that spend between 25 and 34days shooting in the FVG regionA grant of €20,000~so is available to productions that spend between 15 and 24days shooting in the FVG regionA grant of €5,00016 is available to productions that spend between 5 and 14days shooting in the FVG region

Additionally, the footage shot in the FVG region must constitute at least 50% of the finalcut for a production to be eligible for the €150,000 and €70,000 grants. Conversely, thefootage may constitute as little as 10% of the final cut for a production to be eligible forthe €20,000 and €5,000 grants. In all cases the production must also spend at least150% of the awarded amount within the FVG region. Finally, in order to be eligible theproduction must pass a test that looks to the project's feasibility, originality, relevance toand promotion of the FVG region, and economic impact.

Lazio16z

The Lazio region offers support to foreign co-producers for audiovisual productions inthe form of venture capital investment. The maximum amount available is€600,000,163 and the incentive is open to cinematographic, audiovisual, andexperimental (first works) projects. In order to be eligible for the investment theproduction must spend at least 50% of its "under the line" budget164 in the Lazio region.Additionally, applications for the incentive are assessed according to their economicfeasibility and merits, impact on the region, and other sources of financing.165

Trentino~ s6

The province of Trentino offers a film fund administered by the Trentino FilmCommission. The fund is available to local and foreign productions of film, television,documentary, home video, and new media projects. The amount of funding availablevaries depending on the production's format:

- Film and television productions are eligible for up to €200,00067

- Documentary and other productions are eligible for up to €40,00016s

The funding awarded cannot exceed 50% of the production's total cost. In order to beeligible the production must spend at least 150% of the awarded amount within the

158 Approximately USD $185K,ss

Approximately USD $86K,so

Approximately USD $25K16' Approximately USD $6,sz For more information visit http://www.filas.eu/Page.aspx?IDPage=171,s3

Approximately USD $740K,sa

This term is not defined, but presumably it refers to the technical costs associated with the non-creative talent involved in the production.,ss Experimental/first works projects are assessed on different criteria.166

For more information visit http://www.trentinofilmcommission.it/en/SC/2005/Film Fund.html's' Approximately USD $246K,sa

Approximately USD $49K

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province of Trentino.169 Additionally all applicant productions must are evaluatedaccording to criteria that vary depending on the project's format. Generally these criteriahave to do with the production's content, the credentials of the talent involved, theeconomic impact on the province, and the project's distribution plan.

Tuscany

The Toscana Film Commission offers two separate funds to support audiovisual worksproduced in Tuscany. The Cinema Fund170 is aimed at promoting first and secondworks that significantly promote Tuscany, while the Incoming Fund" is designed toassist foreign entities producing films in Tuscany.

The Cinema Fund12 is available for first and second works13 of feature and short filmsintended for theatrical release, documentaries, and television productions. First worksare eligible for up to €200,000,174 second works may receive up to €450,000,175 and fordocumentaries there is a threshold of €50,000176 available. The amount of supportawarded cannot exceed 50% of the total production cost for first or second works,although documentaries are eligible for up to 70% of their total cost. Support from theCinema Fund comes in the form of non-returnable funding for first works anddocumentaries, and production share funding for second works."'

All first works and documentary productions that receive support from the Cinema Fundare required to spend 100% of the funding in Tuscany. Second works are required tospend 150% of the amount awarded within Tuscany. Additionally, all productions thatbenefit from the fund must film at least 50% of their outdoor shots in Tuscany. Finally,applicant films are also assessed according to criteria such as:

- The project's quality

- The promotion of Tuscany

- The prospect of a return on the investment

- The project's feasibility

- The economic impact on Tuscany

The Incoming Fund is designed to reduce the cost of shooting or carrying out technicalproduction work in Tuscany.~~$ It is available to individuals and companies for feature

169 For documentary productions only 120% of the awarded amount must be spent within the province.10 http://www.filminginitaly.com/img/download/regionalfunds/TOSCANA%20FILM%2000MMISSION.pdf"' For more information see the guidelines for the Incoming Films Fund, available athttp://www.toscanafilmcommission.it/english/documents/REGULATION incominq.pdfi~~ Sometimes referred to as the Film Fund.13 First works are those that are considered to be a debut, presumably for the director although this is notmade clear in the guidelines. Second works are all those works that are not considered to be a debut."a Approximately USD $246K15 Approximately USD $555K16 Approximately USD $61 K"' The guidelines do not specify what specific forms these may take, although venture capital investmentand advanced purchase of copyrights are mentioned as potential options."a It is explicitly aimed to reduce the cost of services like accommodations, catering, transportation,costumes and set design, and post-production services.

and short films, TV dramas, and documentaries.179 Feature films and N dramas areeligible for support of u~ to €50,000,180 while short films and documentaries mayreceive up to €25,000. $~ Features and TV dramas that benefit from the Incoming Fundmust spend 150% of the funding amount provided, while short films and documentariesonly need to spend 100% of the amount received.182

Applications for the fund must be submitted prior to shooting in Tuscany, and areevaluated according to the following criteria:

- The length of the shoot in Tuscany

- The use of Tuscan artists)

- The use of Tuscan production services)

- The depiction of Tuscany's historical/cultural identity

- The presence of a Tuscan producer/co-producer

The Cinema Fund and the Incoming Fund are not combinable, and so any productionthat accesses one cannot also access the other.

Veneto

The region of Veneto offers an incentive known as the Regional Film and AudiovisualFund. This fund offers cash grants to both local and foreign production companiesmaking productions in the Veneto region. The amounts awarded vary depending on thelength of filming carried out in the region:

- Up to €200,000183 for projects that film for at least six weeks

- Up to €100,000184 for projects that film for at least four weeks

- Up to €50,000185 for projects that film for at least two weeks

Productions are assessed for eligibility based on the qualifications of the applicantproduction company, the subject and content of the film, the creative talent, thecredentials of the technical crew, the estimated expenditure and shooting schedule inVeneto, and the overall financial plan for the project. Additionally, applicant productionswill also be graded depending on the number and importance of Veneto residentsinvolved in the project, the production contracts behind the project, and the artistic meritof the production. Any projects that receive support from the Fund must spend at least150% of the amount awarded within the Veneto region.

19 Films lasting 75 minutes or more are considered features, whereas those lasting less than 75 minutesare considered shorts.180 Approximately USD $61 K18' Approximately USD $31 K182 Presumably this amount must be spent within Tuscany, although this is not explicitly stated in the fund~quidelines.83 Approximately USD $246K184 Approximately USD $123K185 Approximately USD $61 K

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Executive Summary


Aosta Valley Cash grant Up to €80K (approx. Yes For film and televisionAudiovisual USD $99K) for film and productions, the production mustProduction television productions spend at least 150% of theDevelopment awarded amount in the Aosta

Up to €180K (approx. YesFund Valley regionUSD $222K) foraudiovisual For productions of particular

productions of artistic and economic value, at

particular artistic and least 50% of the production must

economic value be shot in the Aosta Valley region

For documentary and first worksUp to €50K (approx. No production, or productionsUSD $61 K) for seeking support for post-documentary and "first production and distribution, theworks" productions production must spend at least

120% of the awarded amount inUp to €20K (approx. Yes the Aosta Valley regionUSD $25K) for post-production and "First Works" refers to fictionaldistribution financing and animated films at least 60

minutes long that are intended fortheatrical release

The amount awarded cannotexceed 50% of the production'stotal budget

Apulia National Cash grant Up to €150,000 Yes The amount awarded cannotFilm Fund (approx. USD $185K) exceed 50% of the production's

for feature films, N total budgetmovies, and N series

At least 35% of the cast and crewUp to €40,000 (approx. must be Apulian residentsUSD $49K) for At least 200% of the amountdocumentaries awarded must be spent in the

Up to €30,000 (approx Apulia region'es

USD $37K) for short For feature films, televisionfilms and video clips movies and television series, at

least three weeks of filming of theUp to €15,000 (approx. first reel mu 87 take place onUSD $18K) for video Apulian soilgames

For documentaries, at least twoweeks of filming of the first reelmust take place on Apulian soil

For short films, at least four daysof filming of the first reel musttake place on Apulian soil

Can be combined with the ApuliaHospitality Fund

186 For animated films and video games this total rises to 300%187 This requirement rises to four weeks if the production also receives support from the Hospitality Fund,as discussed below

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Apulia Reimbursement Up to 15% of below the No The amount awarded cannotInternational Film on below the line costs incurred in exceed 50% of the production'sFund line costs Apulia, up to a total budget

incurred in maximum of €200KThe applicant Italian productionApulia (approx. USD $246K)company must have completedat least one previousinternational co-production

There must be a distributioncontract in place in the country oforigin for the majority productioncompany

Can be combined with the ApuliaHospitality Fund

Apulia Hospitality Cash Up to €100,000 Applicant productions are The production must spend atFund reimbursement (approx. USD $123K) assessed for eligibility least 150% of the amount

for hospitality for feature films, based on a number of granted within the Apulia regionservices television films, and criteria, most of which

Can be combined with either thetelevision series relate to the productionApulia Film Fund of the Apulialogistics and length of

Up to €20,000 (approx. shoot/impact on the Apulia International Film FundUSD $25K) for regiondocumentaries

Up to €15,000 (approxUSD $18K) for shortfilms and video clips

Friuli Venezia Cash grant Up to €150K (approx. Applicant productions must The footage shot in the FVGGiuli Film Fund USD $185K) for pass a test that examines region must be used for at least

productions that shoot factors including their 50°/a

of the final cut forin the region for at originality and innovative productions accessing the €150Kleast 35 days content and €70K grants

The footage shot in the FVGUp to €70K (approx.USD $86K) for region must be used for at least

productions that shoot 10% of the final cut for

in the region for productions accessing the €20K

between 25 and 34 and €5K grants

da s The production must spend at

Up to €20K (approx. least 150°/a of the amountUSD $25K) for granted within the FVG regionproductions that shootin the region forbetween 15 and 24days

Up to €5K (approx.USD $6) forproductions that shootin the region forbetween 5 and 14 days

Lazio Film Fund Venture Capital Up to €600K (approx. No, although applicant At least 50% of the production'sInvestment USD $739K) productions are assessed "under the line" budget must be

according to various spent in the Lazio regiontechnical and financialcriteria Only available to

cinematographic, audiovisual,and experimental (first works)projects

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Trentino Film Cash grant Up to €200K (approx. Applicant productions are Awarded amount cannot exceedFund USD $246K) for film assessed according to 50% of production's total cost

and television their content, the talentproduction involved, the distribution Film and television productions

plan, and the economic must spend at least 150% of the

Up to @200K (approx. impact on the province awarded amount within the

USD $246K) for province of Trentino

documentary and other Documentary productions mustproduction spend at least 120% of the

awarded amount within theprovince of Trentino

Veneto Regional Cash grant Up to €200,000 Applicant productions are The production must spend atFilm and (approx. USD $246K) assessed for eligibility least 150% of the amountAudiovisual Fund for projects that film in granted within the Veneto region

Veneto for at least six Productions are also

weeks graded according theproportion and importance

Up to €100,000 of Veneto residents(approx USD $123K) involved with the project,for projects that film in its artistic merit, and theVeneto for at least four production contractsweeks

Up to €50,000 (approx.USD $61 K) for projectsthat film in Veneto forat least two weeks

Jamaica

The Jamaica Promotions Corporation (JAMPRO), an agency of the Ministry of Industry,Investment and Commerce, works to facilitate foreign investment in Jamaica. Morespecifically the Jamaica Film Commission (JFC), a division of JAMPRO, is the relevantauthority for the film and video production sector.

The primary source of incentives for film and video production in Jamaica is the MotionPicture Industry Encouragement Act. This legislation allows Jamaican film productioncompanies to enjoy tax-free profits from the overseas release of film and videoproduction for nine years. Additionally, the Act provides a number of benefits toJamaican investment companies, including a 70% "allowance" on production facilityinvestment and no import duty on equipment or materials used for film production orinfrastructure building. The Act also eliminates withholding taxes on dividends paid toresident Jamaican shareholders with investments in film companies (foreignshareholders are taxed in accordance with the provisions of Jamaica's Double TaxationTreaty with their respective countries).

In order to be eligible for the benefits provided under the Act, companies must apply tothe JFC for recognition as a producer /investor in the Jamaican film sector. Onlycompanies incorporated in Jamaica are eligible, and recognized companies must spenda portion of their budget for motion picture production in Jamaica each year.

In addition to the Act, the JFC also offers waivers for the General Consumption Tax(GCT) as an incentive to film production companies. These waivers provide a 16.5% taxrebate on the GCT, which is levied on all goods and services purchased in Jamaica.These waivers are awarded by the JFC on a case-b~-cases basis, but there is aminimum Jamaican production budget of $30,000.$

Jamaica also has a co-production agreement with the UK.189 Under this agreement, co-productions are free from import or export duties and taxes for production equipment,and people employed by the production may freely enter and remain in each country.Additionally, approved co-productions are eligible for each country's financial incentivesfor film production, although these can only be accessed via the country's resident co-producer. The financial contributions of each country's co-producers) cannot be lessthan 20% of the total production cost, nor more than 80%. The rights, revenues andprizes arising from the co-production must be shared between the co-producersaccording to their respective financial contributions to the project.

188 This figure is presumably in USD although the JFC website is not clear:http://www.filmjamaica.com/index.php?action=content&section=incentives

Available at http://www.culture.gov.uk/images/publications/coproductionfilmtreatylamaica Jan08.pdf

-45-

Executive Summary

Name Form Eligible Entities Benefit Eligibility Criteria

Motion Picture Various tax Production companies Tax-free profits for profits on Company must beIndustry incentives overseas release of film and video incorporated inEncouragement Act production for nine years Jamaica

Company mustInvestment companies 70% allowance on investment inproduction infrastructure, can be successfully apply to

carried forward be recognized as abeneficiary under the

No import duty on equipment, Act, recognition canmachinery or materials used for last for up to 15 yearsbuilding film production infrastructure

No withholding tax on dividends paidto resident shareholders withinvestments in film companies

General Tax rebate Production and 16.5% waiver off GCT Minimum JamaicanConsumption Tax investment companies production budget ofWaivers $30,000

Luxembourg

The Film Fund Luxembourg (FFL) offers financial incentives for local productions andinternational co-productions with foreign partners. The FFL is an official body under theMinister responsible for the audiovisual sector. It is the authoritative body for all localproductions and international co-productions.

The FFL offers an Audiovisual Investment Certificate Program (CIAV) by whichproductions may offset a proportion of the costs they incur in Luxembourg. Thesecertificates are available to production companies that are residents of and taxable inLuxembourg, and have audiovisual production as their main object. These certificatesare available for either domestic productions or international co-productions. Eachcertificate is assigned a discount percentage depending on the production's expenditurein Luxembourg, up to a maximum of 30%. At the end of the year in which they receivetheir certificates, production companies can deduct the certificate amount off theirtaxable income.

In order to be eligible for CIAV, a production must meet certain criteria. Any benefitsunder CIAV can only be claimed by eligible companies, and only once the project iscomplete. The claimed production must not be for an ineligible format such aspornography or commercial advertisements. Additionally, the production must beprincipally created in Luxembourg and must contribute to the development of the state'saudiovisual sector.190 The production must also have reasonable prospects ofgenerating a return on investment.

Luxembourg is a party to the ECCC, and also has bi-lateral co-production agreementsin place with Austria, France, Germany, Canada, and Quebec. The co-productionagreements with Canada19' and Quebec'92 stipulate that the co-producer from eachterritory shall hold between 20% and 80% of the copyright in the final production, inproportion to their financial contributions to the project. The agreement with Francerequires that each co-producer be a co-holder of the intangible production elements, butallows the co-producers to agree as to the distribution of revenue from the project.193

190 The production must result in proportionate social, cultural, and economic contributions to the state'saudiovisual industry.'s' See Article VII of the co-production agreement between Canada and Luxembourg, available athttp://www.telefilm.ca/en/coproductions/coproductions/agreements

See Article 4 of the co-production agreement between Quebec and Luxembourg, available athttp://en.filmfund.lu/download-center/index.ph~

See Articles 6 and 9 respectively of the co-production agreement between France and Luxembourg,available at http://en.filmfund.lu/download-center/index.php

-47-

Executive Summary

Name Format Amount Min Spend Other Requirements

Audiovisual Investment Income tax deduction Up to 30% N/A Applicant company must be resident of andCertificate Program taxable in Luxembourg, and have audiovisual

production as their main object

Production must not be for an ineligible format

Production must be principally created inLuxembourg and contribute to the state'saudiovisual sector

Production must have a reasonable likelihoodof generating a return on investment

The certificate must be claimed after thecompletion of the production

.•

Malta

Malta offers two separate film related incentives: a cash rebate for productionsadministered by the Malta Film Commission (MFC), and a tax credit for filmproduction/distribution from Malta or investment in Maltese audiovisual infrastructure.Both incentives require applicants to make submissions for financial assistance after thecompletion of the claimed project.

The MFC offers a cash rebate pursuant to the Financial Incentives for the AudiovisualIndustry Regulations 2008.194 The rebate is calculated according to the qualifying localexpenditure, which cannot exceed 80% of the total production budget. Productionscosting more than €100,000 may qualify for a rebate ranging from 15-22% of thequalifyinq~ expenditure, while projects costing €100,000 or less may receive an 18-32%rebate.19 The percentage amount awarded is dependant on the total annual fundingstill available for film incentives and the production's score on a cultural test. This testlooks to factors such as the story, setting, and whether or not Malta is depicted asMalta.

In addition to this rebate, companies producing/distributing films in Malta and investorsin Maltese film production infrastructure are eligible for a tax credit under the MaltaEnterprises Act. This credit can take one of two forms: the credit can either amount toup to 50% of the qualifying expenditure, or it can equal up to 50% of the wage cost forthe first 24 months of a newly created job relating to the supported investmentproject.196 For the purposes of the tax credit, infrastructure is defined as immovableproperty and equipment relating to or required for audiovisual productions.

Malta is a party to the ECCC and also has a bilateral co-production agreement in placewith Canada. The qualification requirements for this co-production agreement includeminimum and maximum contribution percentages for the co-producers from eachcountry, proportionate revenue sharing, and co-production crediting. Additionally, eachco-producer must own a copy of the final negative and hold any necessary reproductionrights.197 All qualified co-productions are fully eligible to take advantage of all incentivesavailable in both countries.

,sa http://www.mfc.com.mt/page.asp?p=14253&1=1195 €100K is equal to approximately USD $123K.196 This second form is unlikely to arise in the context of investment into a film &video production.197 Please see Article VIII of the co-production agreement between Canada and Malta, available at:http://www.telefilm.ca/en/coproductions/coproductions/agreements

.•

Executive Summary

Originating Body Format Amount Min Spend Other Requirements

Malta Fiim Cash rebate 15-22% of qualifying expenditure N/A Qualifying expenditure onlyCommission for productions costing above counted up to 80% of total

€100K (approx. USD $123K) production cost

18-32% of qualifying expenditure Amount awarded dependent onfor productions costing below cultural test and annual budget€100K (approx. USD $123K)

If total production cost is above€100k then cumulative state aidcannot exceed 50% of totalproduction budget

Malta Enterprise Act Tax credit Up to 50°/o of qualifying expenditure N/A For investment in Malteseaudiovisual production infrstructure

OR

Up to 50% of wage cost for 24months ofjob created byinvestment

-50-

Mexico

Mexico has a number of incentives available for international film and televisionproductions shot in the country. The Support Program for the High Impact Film andAudiovisual Industry Program (Pro AV) is administered by ComeFilm, the Mexican FilmCommission,198 and ProMexico,'99 the country's foreign investment promotion agency.The Mexican Film Institute (Imcine),20° also offers a number of support programs: theFilm Investment and Stimulus Fund (Fidecine), the Fund for Quality Film Production(Foprocine), and Article 226 of the Income Tax Law (Eficine 226).

Pro AV

The High Impact Film and Audiovisual Industry Program was launched in 2010, and hasproven to be a major success for the Mexican film industry.201 Under the program,eligible productions can receive a cash rebate for up to 17.5% of their expenditure inMexico.

The Pro AV incentive has two prongs of support: a full refund for the VAT levied on aproduction, and a direct reimbursement for up to 7.5% of the qualifying local productionexpenditure. VAT rates vary from 11-16% depending on the region where productiontakes place, and the refund of this tax is available to all productions regardless of theirMexican expenditure. However, the additional reimbursement is only available toproductions that involve at least MXN $70 million202 in local costs. Together these twobenefits enable productions to recover up to a maximum of 17.5% of their total Mexicanproduction expenditure.

The incentive is available to any company that pays taxes in Mexico, so foreignproductions can either open a local company for the production or team with a pre-existing local entity.

Productions that take advantage of the Pro AV incentive are excluded from accessingthe Fidecine, Foprocine, and Eficine 226 support programs offered by the Mexicanfederal government. However, such productions are not barred from accessing otherresources for support, such as those offered by state or municipal governments.

Fidecine203 and Foprocine2o4

Imcine offers two funds to support the production, post-production, distribution, andexhibition of fiction and animated feature films. Fidecine generally supports morecommercial productions as compared to the more art house-focused Foprocine.Funding from each of these funds is available in the form of venture capital and creditlines.

198 http://www.comefilm.gob.mx/,ss http://www.promexico.gob.mx

zoo In order to be eligible for any incentive administered by Imcine, a production must have a running timeof at least 75 minutes. See http://www.imcine.gob.mx/largometraje.html201 http://www.hollvwoodreporter.com/news/how-a-new-generation-filmmakers-1879372°Z Approximately USD $5.3 million.203 More information is available in Spanish at httq://www.imcine.gob.mx/media/23231.pdf

zoa http://www.imcine.gob.mx/foprocine.html

-51-

A production may only access support from either Fidecine or Foprocine, the two cannotboth be accessed for a single project. However, either of the two incentives can beaccessed at the same time as the Eficine 226 program.

Eficine 226205

Article 226 of Mexico's Income Tax Act offers Mexican taxpayers that invest in eligiblefilm productions a credit against their income taxes. The benefit is available to any entitythat pays taxes in Mexico. The incentive be accessed for investments into fiction,animated, or documentary feature films that are produced in Mexico. The credit is equalto the amount invested in the production, up to the lesser of MXN $20 million206 or 10%of the investing entity's total tax liability for the previous year. The amount invested intothe project also cannot exceed 80% of the total production budget, and at least 70% ofthe amount must be spent in Mexico. This incentive can be combined with support fromeither the Fidecine or Foprocine programs, but not both.

Co-Productions

Mexico also has co-production agreements in place with Argentine, Canada, France,and Spain. The requirements for these agreement include minimum and maximumcontribution percentages for the co-producers from each country, proportionate revenuesharing, and co-production crediting. Additionally, each co-producer must own a copy ofthe final negative and hold reproduction rights.207 All qualified co-productions are fullyeligible to take advantage of all incentives available in both countries.

Zo5 For more information see http://www.imcine.gob.mx/eficine-226.htmlzos Approximately USD $1.5 million.207 Please see Article VIII of the co-production agreement between Canada and Mexico, available at:http://www.telefilm.ca/en/coproductions/coproductions/agreements

-52-

Executive Summary


Pro AV Cash rebate Maximum rebate of 17.5% MXN $70 million (approx. Productions that access Pro AVof local production USD $5.3 million) are ineligible for Fidecine,expenditure available via: Foprocine, or Eficine 226

1) Complete refund for allVAT levied on theproduction; and

2) Reimbursement for upto 7.5% of the localproduction expenditure

Fidecine / Venture capital / Fidecine is geared towardsFoprocine credit line commercial productions, whereas

Foprocine is geared towards moreartistic endeavors

Cannot be accessed at the same-time, but either can be combinedwith Eficine 226

Eficine 226 Tax credit MXN $20 million (approx. At least 70% of invested amountUSD $1.5 million) or 10% must be spent in Mexicoof investor's taxes fromprevious year Amount invested cannot exceed

80% of the total budget

Can be accessed in addition toeither Fidecine or Foprocine

-53-

The Netherlands

The Netherlands Film Fund (NFF) is a national agency devoted to the promotion andsupport of film production in the Netherlands. It operates under the Ministry of Cultureand receives annual government funding that it can disperse at its own discretion. Thetotal funding for 2012 is €35.1 million.2os 2os

The NFF is available to European Union production companies that have beenoperating for a minimum of two years. The fund is also open to directors andscreenwriters but only for experimental or animated production that have totalproduction budgets under €25,000.210 Whether or not a production is eligible for theNFF depends on a number of qualitative factors. These include the quality of the script,the creative talent involved, and the possibility for national/international release, sales,and distribution.

Each year a portion of the NFF known as the Supplementary Regulations subsidy isset aside for feature len~th films with significant commercial potential in Dutch cinemas.In 2012 €11.79 million21 from the fund's annual budget was set aside for this subsidy. Itis only available to producers with at least three years in business in the EU, and whichhave a permanent office in the Netherlands. In order to be eligible for this subsidy,applicant producers must have at least 70% of their total financing in place.

The NFF also supports a few Dutch producers each year in their roles as minority co-producers with foreign partners. The maximum contribution a minority co-producer canmake is €200,000212 for a feature film, or €50,000213 for an animated film ordocumentary. Additionally the total Dutch share of the project must be at least 10%.Priority is given to projects that involve partners from Europe or a country with which theNetherlands has signed a co-production agreement. These projects must havesubstantial funding from the country of the majority co-producer, amounting to at least50% of that producer's contribution.

The Netherlands is a party to the ECCC, and also has a bilateral co-productionagreement in place with Canada. The qualification requirements for this co-productionagreement include a minimum contribution percentage for minority co-producers,proportionate revenue sharing, and co-production agreement accreditation. Additionally,each co-producer must own a copy of the final negative and hold any necessaryreproduction rights.214 All qualified co-productions are fully eligible to take advantage ofall incentives available in both countries.

208 Approximately USD $43.2 million.209 http://www.filmfonds.nl/nieuws/extra-pagina-s/enalishzoo Approximately USD $30.8K.21 Approximately USD $14.5 million.2'Z Approximately USD $246K.2'3 Approximately USD $62K.2'4

Please see Article VII of the co-production agreement between Canada and the Netherlands, availableat: http://www.telefilm.ca/en/coproductions/coproductions/agreements

-54-

Executive Summary

Name Eligible Applicants Production Budget Other RequirementsRequirements

The Netherlands Film Fund Dutch Production Company N/A Qualitative eligibility factorswith at least two years include the quality of theoperation experience script, film plan, creative

talents, and the financialDirector or screenwriter for Cannot exceed €25K prospectsexperimental or animated film (approx. USD 30.8K)

NFF — Supplementary Dutch or EU Production At least 70% of total financingRegulations Subsidy Company with at least three must already be in place

years operation experienceand a permanent office in theNetherlands

NFF —Dutch Minority Co- Dutch Production Company Applicant Producer's Qualitative eligibility factorsProduction Support with at least two years contribution cannot exceed include the quality of the

operation experience, making €200,000 for a feature film script, film plan, creativea minority contribution to an (approx. USD $246K), talents, and the financialinternational co-production or €50,000 for an animated prospects

film or documentary(approx. USD $62K) Dutch contribution to the

production budget must be atleast 10%

Majority producer's countrymust be contributing asignificant portion of the totalproduction budget and at least50% of that producer's share

-55-

New Zealand

New Zealand offers four notable film production related grants: the Large BudgetScreen Production Grant (LBSPG), the Post/Digitai/Visual Effects Production (PDV)Grant, the Screen Production Incentive Fund (BPIF), and the Feature Film FinishingGrant (FFF). Each of these incentives is administered by the New Zealand FilmCommission (NZFC), the national agency for promoting New Zealand's film industry.2~5

The LBSPG and the PDV Grant

The LBSPG was created to encourage the production of both foreign and domesticlarge budget film and television productions in New Zealand. The grant offers a 15%rebate on a project's qualifying New Zealand production expenditure (QNZPE).216 Inorder to be eligible for the LBSPG, a production must meet the minimum productionexpenditure requirement of NZD $15 million217 for a feature film. For television projects,the production must have a minimum average QNZPE of NZD $500,000218 percommercial hour, and amounting to a minimum total of NZD $15 million.219

In addition to the LBSPG, some projects may be eligible for an Additional LBSP Grantif they meet certain additional expenditure requirements. Specifically, if a production'soverall QNZPE is NZD $200 million220 or more,221 then the project may be eligible for afurther 15% rebate on its Qualifying Additional Expenditure (QAE).222 However, themaximum QAE that may be claimed for an individual production is NZD $65 million.223

The PDV Grant was introduced to specifically foster the capacity and development oflarge budget PDV productions. The grant is very similar to the LBSPG and likewiseoffers a 15% rebate on a project's QNZPE, albeit only that which is directly ornecessarily related to PDV production.224 In order to be eligible for the PDV Grant, the

z~s All the information and documents described in this section can be found on the New Zealand FilmCommission website, http://www.nzfilm.co.nz/2's QNZPE generally refers to goods and services provided in New Zealand, the use of land located inNew Zealand, and the use of goods that are located in New Zealand at the time that they are used in themaking of the screen production. Please see Section III of the Large Budget Screen Production GrantCriteria, available at: http://www.nzfilm.co.nz/RequlatoryApprovals/LargeBudgetGrantScheme.aspx21 Approximately USD $12.2 million.218 Approximately USD $406K.2's Additionally, principal photography for each individual episode must be completed within twelvemonths of commencement.ZZ° Approximately USD $162.4 million.2z' In the case of a television project, the production must have a minimum average QNZPE of NZ$500,000 per commercial hour, amounting to a minimum total of NZ $200 million.2z2 See Section IIIA of the Large Budget Screen Production Grant Criteria - QAE is defined as paymentsto creative contributors to the project that are not QNZPE. This can include guaranteed deferments orparticipation payments. QAE is defined as payments payable to creative contributors who are NewZealand residents paid within three years from the first commercial release of the project.ZZ3 Approximately USD $52.8 million.Z24 See Section IV of the Large Budget Screen Production Grant Criteria - PDV production is defined asincluding any film laboratory, sound post production, digital post production, and visual effects production.

-56-

project's QNZPE that is directly or necessarily related to PDV production must be atleast NZD $3 million225 but not exceed NZD $15 million.226 Z2~

The LBSPG and the PDV Grant are available for feature films, television movies, andtelevision drama series and mini-series. Documentaries are specifically excludedfrom eligibility for the LBSPG and PDV Grant.

In order to be eligible to apply for either the LBSPG of the PDV Grant, an applicant mustbe a company that is a resident of and carries on business in New Zealand, or elsehas a fixed establishment and files an income tax return in New Zealand.Additionally only those entities responsible for all production activities228 and with fullaccess to the relevant financial information may be applicants for either grant.

Additionally, where two or more projects each have a minimum QNZPE of NZD $3millionz29 those ~ro~ects may be bundled together to achieve a QNZPE of NZD $30million or more. 30 3~ The applicant must be the same for each production beingbundled, or else the different applicants must have at least 50% of their shareholding incommon. Additionally, each of the productions must be completed within 24 months ofthe earliest date that any of the projects commenced that form of production.232

Only one of the two grants may be received by any individual production. Furthermore,if a production applies for one of the grants, then it is not eligible for any other filmfinance or tax incentives offered by the New Zealand government.

The SPIF

The SPIF is meant to support, retain, and incentivize the development of New Zealandcultural screen content. It offers a grant of 40% of the QNZPE for eligible feature films,or 20% of the QNZPE for other eligible production formats.233 However, the productionmust first meet the minimum QNZPE requirement for its specific format.z3a

In order to be eligible for SPIF, a production must fall within one of the eligible formatcategories. These include feature films, single episode programmes, documentaries,television series, and short form animations. Additionally, productions are required tohave confirmed commercial distribution agreements in place at the time of application.

225 Approximately USD $2.4 million.226

Approximately USD $12.2 million.22' If the QNZPE directly relating to or necessary for PDV production exceed NZD $15 million then theproduction is advised to apply for the LBSPG instead of the PDV Grant.Z$ For the LBSPG, this refers to the making of the production in New Zealand. For the PDV Grant, thisrefers to all the PDV production for the project in New Zealand.zz9 Approximately USD $2.4 million.zso

Approximately USD $24.4 million.23' See Section II of the Large Budget Screen Production Grant Criteria — Please note that this rule maynot be used to qualify projects for the Additional LBSP Grant.Z3Z

Either principal photography for the LBSPG or PDV Production for the PDV Grant.z33

The maximum QNZPE that may be claimed under SPIF is NZ $15 million.23a For example, the minimum QNZPE for a feature film is NZ $2.5 million. Please see Section II of theScreen Production Incentive Fund Criteria for more information, available at:http://www.nzfilm.co.nz/DevelopmentAndFinancinq/Screen Production Incentive Fund.aspx

Finally, a production must be certified by the NZFC as having "significant New Zealandcontent." This involves a cultural test that looks to the production's content, thenationalities of the filmmakers, and other relevant matters such as ownership of thecopyright.235

The FFFG

The NZFC also has an annual pool of about NZD $150,000236 that it uses for the FFFG.This money is for the specific purpose of assisting with the finishing of films, and theNZFC allocates grants up to a maximum of NZD $25,000237 on a discretionary basis.

According to the NZFC's guidelines for the FFFG,23S in order to be eligible for the granta film must meet all of the following criteria:

- The film must have significant New Zealand Content

- The film must be 80 minutes or longer

- The film must require a 35mm or digital finish

- The film must have a credible theatrical distribution plan for New Zealand and/oroverseas distribution

Only New Zealand citizens, permanent residents, or companies carrying on businessand with their central management and control in New Zealand may apply for the FFFG.

Co-Productions

New Zealand has co-production agreements with Australia, South Africa, Canada,China, France, Germany, India, Ireland, Italy, Korea, Singapore, Spain, and the UK. Ifthe requirements of these agreements are met, then a co-production will be eligible forcertification as a New Zealand film and may be able to attract support from the NZFC.This includes being considered to have significant New Zealand content for thepurposes of eligibility for the SPIF.

zss

Note that New Zealand ownership of the copyright is not required to pass the cultural test, but it doesadd to the production's score on the cultural assessment.

zss

Approximately USD $122K.23'

Approximately USD $20.3K.238

Please see the NZFC's Finishing Grant Guidelines for more information on the FFFG, available at:http://www.nzfilm.co.nz/DevelopmentAndFinancing/FeatureFilmFinishingGrant.aspx

Executive Summary

Name Format AmountMinimum Local Cultural

Other RequirementsExpenditure Test

Large Budget Cash rebate 15% of NZD $15 million No Only available for productions of eligibleScreen Production QNZPE (approx. USD $12.2 formatsGrant million). This total may Applicants must be companies that are

be spread across an residents of and carry on business inaverage of NZD $500K New Zealand, or else have a fixedper commercial hour for establishment and file an income taxa television production return in New Zealand(approx. USD $406K)

Applicants must be responsible for allproduction activities and have fullaccess to the relevant financialinformation

Additional LBSP Cash rebate 15% of NZD $200 million No Only available in addition to aGrant on top of Qualifying (approx. USD $162.4 successful LBSPG claim

LBSPG Additional million) Only available for Qualifying AdditionalExpenditure Expenditure, as defined in the

guidelines

A maximum of NZD $65 million QAEmay be claimed per production(approx. USD $52.8 million)

PosUDigital/Visual Cash rebate 15% of NZD $3 million (approx. No Only available for productions of eligibleEffects Production QNZPE USD $2.4 million), but formatsGrant directly or less than NZD $15 Applicants must be companies that are

necessarily million (approx. USD residents of and carry on business inrelated to $12.2 million) New Zealand, or else have a fixedPDV establishment and file an income taxproduction return in New Zealand

Applicants must be responsible for allproduction activities and have fullaccess to the relevant financialinformation

Bundled Access to Alternate 15% of NZD $3 million for each No Cannot be used to access AdditionalLBSPG or PDV form of QNZPE for of the bundled LBSP GrantGrant access to the form of productions (approx. Each of the productions must have

above production USD $2.4 million), and completed the form of production beingincentives being NZD $30 million for the claimed within 24 months of the earliest

claimed entire bundle (approx. date that any of them began that formUSD $24.4 million) of production

The applicant for each production mustbe the same, or else all applicants musthave at least 50% of their shareholdingin common

The normal requirements for theincentive being claimed still apply

Screen Production Cash rebate 40% of Varies depending on the Yes Production must fall within one of theIncentive Fund QZNPE for format, please see the categories of eligible formats

feature films, guidelines for specificor 20°/a of minimum expenditureQNZPE for thresholdsother formats

Feature Film Cash grant Up to NZ N/A Yes Grant is allocated for the specificFinishing Grant $25K purpose of finishing feature films

(approx. The film must be 80 minutes or longerUSD $20.3K)

The film must require a 35mm or digitalfinish

The film must have a credible theatricaldistribution plan for New Zealand and/oroverseas distribution

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Serbia

The Serbia Film Commission (SFC) is a private association of entities in the Serbianfilm industry. It aims to develop Serbia as a competitive international destination, as wellas to support local productions. The SFC works closely with the Serbian government toimprove the country's film industry via incentives and promotion.

In 2011, Serbia offered the Serbia Film Incentive, a cash rebate incentive program tointernational productions working in Serbia. These projects were eligible for a rebate ofup to 15% on local production expenditure for goods and services, and a further 12%rebate for labour.239 The minimum production expenditure required for this incentivewas €2 million,240 and there was no set cap on the level support available. Foreignproduction companies could access this incentive by registering Special PurposeVehicle companies for the production project.

It is not clear if Serbia's 15% incentive program is still available.241 However, inDecember 2011 the Serbian Parliament passed a new Film Law, which comes intoforce in July 2012.242 This legislation will create a new 20% cash rebate incentive forforeign companies producing film and video projects in Serbia. It is not clear what thespecific terms of this incentive will be, or whether it will be an additional incentive orsimply an expansion of the previous Serbian Film Incentive.

Executive Summary


Serbian Film Incentive Cash rebate Up to 15% of local €2 million (approx. USD Foreign productionsgoods and services $2.5 million) must register a Special

Purpose Vehicle inUp to 12°/o off labour Serbia to access thetaxed in Serbia incentive

Film Law Incentive Cash rebate 20% Unknown This program may bean expansion orreplacement of theSerbian Film Incentive,or it may be anadditional program

Z39 This included both Serbian and foreign crew and talents, provided they were paid in Serbia during thecourse of the production and registered to pay local taxes.zao Approximately USD $2.5 million.Za' The SFC website states that the incentive was only available for 2011, and that all applications mustbe submitted by November 15, 2011. For more information visithttp://www.filminserbia.com/News/NEWFILMINCENTIVEINSERBIA.aspx

For more information visit http://www.filminserbia.com/SerbianFilmincentive.aspx

•1

Singapore

Financial support for international film and television productions looking to shoot inSingapore is available via the Singapore Tourism Board (STB). The MediaDevelopment Authority (MDA) and its agency the Singapore Film Commission (SFC)also offer significant financial incentives to international productions.

Film In Singapore! Scheme243

The Film in Singapore! scheme is offered by the STB, and is aimed to attractinternational film and television producers to Singapore. Under the scheme, the STB willsubsidize up to 50% of a production's qualifying local expenditure. The actual fundingavailable to each project is evaluated on a case-by-case basis depending on howSingapore's unique attributes are portrayed.

In order to qualify for the Film in Singapore! incentive, an international producer mustsubmit an application at the beginning of production. Application packages must meetfour general requirements:

- Singapore must be showcased in a positive light in the script

- The STB must be provided with an estimated budget

- The creative talent involved must have a reputable track record

- The production must have a financing, marketing, and distribution plan in place

MDA Production Assistance Grant

The MDA offers a broad Production Assistance Grant that can be used to supportcompleted international productions. The grant is available to film productions andanimated feature or television projects.244 Productions that are approved by the MDAwill be eligible for a grant equalling up to 40% of their Singapore Spend.245 Additionally,approved applicants are eligible for a further grant of up to 10% of the Singapore Spendfor any follow-up projects commenced within 12 months of the first project'scompletion.2a6

The Production Assistance Grant is available to Singapore companies that areregistered with the Singapore Standard Industrial Classification Code (SSICC).

New Talent Feature Grant

The MDA also offers an incentive specifically for first and second time directors fromSingapore. An SSICC-registered company may apply for the grant on the director'sbehalf. The grant will cover up to SGD $250,000247 or 100% of the production's budget,

243 For more information see https://app.stb.gov.sq/asp/ina/ina04.asp

zaa The grant is also available to a range of other media, as described on the MDA Production Assistancepage at http://www.smf.sq/schemes/pages/ProductionAssistance.aspx45 This includes expenditures in Singapore for manpower, transportation, insurance, etc. See theProduction Assistance webpage supra note 2 for more information.

gas

This second project is also eligible for a full Production Assistance Grant.24' Approximately USD $201 K.

-61 -

whichever is lower, provided at least 40% of the production budget is spent inSingapore. In order to be eligible a film must be 70 minutes long and be shot on 35mmor an eligible digital film format.


Singapore also features bilateral co-production agreements with Australia, Canada,China, Korea, and New Zealand.248 Qualifying co-productions will be treated as nationalfilms in each country and be eligible for all of the incentives available in eachjurisdiction. The minimum financial contribution of each participant in these agreementsis 20% of the total production budget.

Executive Summary

Name Form Amount Additionallnformation

Film in Singapore! Scheme Cash grant Up to 50% of local production cost Discretionary award

Singapore must beshowcased in a positive lightin the script

The STB must be providedwith an estimated budget

The creative talent involvedmust have a reputable tackrecord

The production must have afinancing, marketing, anddistribution plan in place

Production Assistance Cash grant Up to 40% of local production cost Available to film projects andGrant animated feature or television

Additional 10%grant for second project if productionsbegun within 12 months

New Talent Feature Grant Cash grant SGD $250,000 (approx. USD $201 K) or At least 40% of production100% of production cost, whichever is lower budget must be spent in

Singapore

Film must be 70 minutes longand shot on eligible film format

2''$ For more information visithttp://www.mda.gov.sq/International/BiICoAgreement/Pages/agreements.aspx

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South Africa

The South African Department of Trade and Industry (DTI) offers two incentiveprograms for film and television production: the Foreign Film and Television Productionand Post-Production Incentive (FFTPI) and the South African Film and TelevisionProduction and Co-Production Incentive (SAFTPI).249

Foreign Film and Television Production and Post-Production Incentive

The FFTPI is meant to attract productions that will contribute to the South Africaneconomy and enhance the nation's international profile. The incentive comes in the formof a cash rebate, the amount of which varies according to the type of production that isconducted in South Africa:

For productions that shoot on location in South Africa, the incentive will be 20%of the Qualifying South African Production Expenditure (QSAPE). The QSAPEmust be at least ZAR $12 million250 in order to qualify for this rebate.For productions that conduct post-production in South Africa, and have aQualifying South African Post-Production Expenditure (QSAPPE) of ZAR $1.5million,25 the incentive will be 5%Productions that meet the qualification requirements for both incentives maycombine them for a cumulative rebate of 25%

It should be noted that there is no maximum amount for this incentive.

The incentive is available to foreign-owned qualifying productions and South Africanqualifying post-productions that:

- Have a QSAPE of at least ZAR $12 million252 and film at least 50% of theproduction in South Africa over a minimum of four weeks;

- Have a QSAPPE of at least ZAR $1.5 million, 253 provided that 100% of the post-production is conducted in South Africa and takes a minimum of two weeks; or

- Fulfil both of the above requirements.

Applicants must be Special Purpose Corporate Vehicles (SPCV), incorporated in SouthAfrica for the sole purpose of the applicable film or television project. These SPCVsmust be responsible for all production/post-production activities in South Africa andmust have full access to the production's worldwide financial information. There mayonly be one SPCV per film, television, or documentary project.

Z49 For more information, visithttp://www.dti.gov.za/financial assistance/financial incentive.jsp?id=7&subthemeid=26

Approximately USD $1.5 million.z5' Approximately USD $185K.z52

Approximately USD $1.5 million.zss Approximately USD $185K.

~~~

South African Film and Television Production and Co-Production Incentive

The SAFTPI was designed to encourage the local South African film industry. It offers acash rebate of 35% for the first ZAR $6 million254 of QSAPE, and an additional 25%rebate on any further QSAPE. Only productions with budgets exceeding ZAR $2.5million255 are eligible for the incentive.

Applicants must be SPCVs incorporated in South Africa for the sole purpose of theapplicable film or television project. The majority of shareholders in these SPCVS mustbe South African residents, and one of them must take an active role in the production.These SPCVs must be responsible for all production/post-production activities in SouthAfrica and must have full access to the production's financial information. There mayonly be one SPCV per film, television, documentary, or animated project.

Executive Summary

Name Amount Minimum Expenditure Other Requirements

FFTPI Up to 20% of the QSAPE QSAPE of at least R $12 million At least 50% of the shooting~approx. USD $1.5 million) schedule must take place in

Up to 5% of the QSAPPE South Africa over at least fourQSAPPE of at least R $1.5 million weeks (two weeks for SAFTPI)(approx. USD $185K)

Conduct 100% of post-SAFTPI 35% on the first R $6 million QSAPE Production budget of at least R $2.5 million production in South Africa over

(approx. USD $741 K) (approx. USD $309K) at least two weeks

25% on all further QSAPE Applicants must be SPCVs

zsa Approximately USD $741 K.255

Approximately USD $309K.

•~

South Korea

The Korean Film Council (KOFIC) offers a Location Incentive to support the shootingof foreign film and television productions in Korea. The incentive is a 25% cash rebateon production expenditure incurred in Korea, up to a maximum of KRW $3.4 billion.256

The rebate is available to foreign-produced film and television productions that meetcertain requirements. Eligible productions must have at least 80% of their totalproduction cost covered via foreign capital. Only Korean registered businesses mayapply for the rebate, so foreign companies must form local companies for the productionor partner with local businesses. The production must shoot in Korea for at least tendays, and have a local Qualifying Production Expenditure (QPE) of no less than KRW$1 billion.257 The production must also be theatrically released in overseas territories.Finally, KOFIC shall evaluate each applicant production before approving it for therebate, and assess three factors:

- the production's investment in Korean tourism and revenues;

- the production's contribution to the Korean film industry; and

- the foreign producer's contribution to the work completed in Korea.

There are also a number of regional film commissions throughout Korea that offer theirown incentive programs to foreign film and television productions. The KOFIC websitelists a 25% cash rebate incentive as being available from the city of Incheon,258 a 20%rebate available in Daejeon,259 and a 30% rebate available in Busan.260 Additionally, thecity of Seoul and the province of Gyeong-Nam have the following incentives available:

The Seoul Film Commission offers a cash rebate of up to 25%for production shot inSeoul, up to a maximum of KRW $100 million.261 This incentive is available tointernational co-productions that shoot in Seoul for at least six days, are at least 60minutes long, and have a distribution plan in place.262

The Gyeong-Nam Film Commission (GNFC) offers a cash rebate of up to 30% for filmproductions shot and/or produced within the province.263 In order to be eligible for the

z56 Approximately USD $3 million.25' Approximately USD $884K.258 This incentive is available for up to a maximum of KRW $100 million (approximately USD $88.6K). Inorder to be eligible, productions must have an overall budget of at least KRW $500 million (approximatelyUSD $443K) and shoot at least seven scenes in Incheon at a cost of at least KRW $100 million(approximately USD $88.6K). For more information seehttp://www. koreanfilm.or. kr/ISp/IocKorea/filmOrgView.jsp?seq=7&pagel ndex=1fs~

This incentive is available for both pre- and post-production work, and each incentive can amount upto a maximum of KRW $150 million (approximately USD $133K). In order to be eligible, productions musthave an overall budget of at least KRW $1.5 billion (approximately USD $1.5 million) and at least 60% ofthe scenes must be shot in the Daejeon region. For more information seehttp://www. koreanfilm.or. kr/isp/IocKorea/filmOrgView.jsp?seq=5&pagel ndex=1~ Up to a maximum of USD $100,000. No more information is available on either the KOFIC website orthe English page for the Busan Film Commission. Seehttp://www.koreanfilm.or.kr/Lsp/IocKorea/filmOrgView.jsp?seq=2&pagelndex=1~ Approximately USD $88k .This cap can be lifted in exceptional circumstances.262 For more information visit http://enq.seoulfc.or.kr/contents.asp?doc=incentivesOverview2s3

For more information visit http://www.gnfc.co.kr/sub/enq/business/business.html

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incentive the project should be complete, with the film in the distribution stage at thetime of application.

Korea also has co-production agreements with Canada, France, New Zealand, and theEU.264 The requirements for these agreement include minimum and maximumcontribution percentages for the co-producers from each country, proportionate revenuesharing, and co-production crediting. Additionally, each co-producer must own a copy ofthe final negative and hold reproduction rights.265 All qualified co-productions are fullyeligible to take advantage of all incentives available in both countries.

Executive Summary

Name Form Amount Minimum Expenditure Other Information

KOFIC Location Cash rebate 25% of qualifying Korean KRW $1 billion Foreign capital must accountIncentive expenditure, up to a max (approx. USD $884K) for 80% of total budget

of KRW $3.4 billion(approx. USD $3 million) Applicant must be registered

Korean business

Production must shoot inKorea for at least 10 days

Production must be releasedtheatrically overseas

KOFIC will consider additionalfactors at its discretion

Seoul Location Cash rebate 25% of production cost N/A Production must shoot inIncentive incurred in Seoul, up to a Seoul for at least six days

max of KRW $100 million(approx. USD $88K) Production must have running

time of at least 60 minutes

Production must havedistribution plan in place

Gyeong-Nam Cash rebate 30% of production cost Filming must be completeLocation Incentive incurred in province

Production must be indistribution stage

Incheon Location Cash rebate 25% of production cost KRW $100 million At least seven scenes mustIncentive incurred locally, up to a (approx. USD $88K) be shot in Incheon

max of KRW $100 million(approx. USD $88K) The total production budget

must exceed KRW $500million (approx. USD $443K)

Busan Locaiton Cash rebate 30% of production costIncentive incurred locally up to a

max of USD $100,000

Daejeon Location Cash rebates 20% of production cost In order to be eligible for In order to be eligible for theIncentives for both pre- incurred locally, up to a the pre-production pre-production incentive, at

and post- max of KRW $150 million incentive, the total cost of least 60% of the scenes mustproduction work (approx. USD $133K) production must exceed be shot in the Deajeon region

KRW $1.5 billion (approx.USD $1.3 million)

2sa For more information visit http://www.koreanfilm.or.kr/jsp/coproduction/treaties.js~. See Section ASub-Section B of the agreement with the EU for the provisions specifically related to film productions.zss Please see Article IX of the co-production agreement between Canada and South Korea, available at:http://www.telefilm.ca/en/coproductions/coproductions/agreements

•.

Taiwan /Republic of China

There are numerous incentives available in Taiwan to attract film production. TheCentral Government of the Republic of China (ROC) offers production support broadlyto "foreign motion picture production enterprises" via the Government Information Office(GIO). Meanwhile, the Taipei City Government has a fund to support film production inTaipei, and it is administered by the Taipei Film Commission (TPC).

Incentives from the G102ss

The GIO offers numerous incentives in the form of cash grants to eligible productions.Funding is available for up to 30% of costs relating to the employment of ROC nationalsas cast and crew, and up to 25% of filming, pre-production, and post-productionexpenses. These two incentives may be combined though they can also be awardedseparately. Additionally the GIO offers to reimburse up to 15% of the cost oftransportation, lodging, liabilit~ insurance, and accident insurance for ROC nationalsemployed by the production.2 ~ However, the GIO explicitly states that these maximumpercentage amounts do not necessarily apply for "globally recognized foreign motionpicture production enterprises and directors." Productions like these that would enhancethe ROC's international image may be eligible for additional funding at the GIO'sdiscretion. The minimum local expenditure required for eligibility is TWD $3 million,268 269

and funding is available up to a maximum of TWD $20 million.2 °

In order to be eligible these incentives, projects must meet certain requirements.Funding is available for productions of feature films and animated films27 over 70minutes in length. Only ROC incorporated companies working in conjunction withforeign enterprises may receive funding, and these partnerships must be approved atthe beginning of production. Certification applications must include the contract betweenthe relevant ROC company and the foreign production enterprise, as well as a plotoutline, scene breakdown, film proposal and production schedule.

Additionally, funding is not available to productions that are receiving any form ofsupport from mainland Chinese investors. Applications for the incentives offered by theGIO must include affidavits proving that the production is not receiving any form ofsupport from mainland China.

Zs6 See http://www.taiwancinema.com/ct 54857 143Z6' Note this incentive is only available to feature film productions.26$

Approximately USD $100K.Z69 This total must not include any form of local, public-supported funding that the production is receiving.270 Approximately USD $667K.27 Both 2D and 3D animations are eligible.

~:~!

Incentives from the TFC2~2

The TFC administers a fund created by the Taipei City Government to support foreignfilm productions operating in Taipei. Each year the fund is allocated a total budget andthe TFC then disperses this to applicant productions at its own discretion. In order to beeligible for funding a production must be at least 70 minutes long, must be shot on16mm, 35mm, or a digital film equivalent, and have plans in place for marketing anddistribution. Additionally, productions must either use Taipei as a setting, shoot sceneswithin the city, or engage a local post-production company. Only local companies areeligible to apply for the fund so foreign productions must either incorporate locally orwork with a domestic partner to access the support.

Executive Summary


ROC Production Cash grant Up to 30% of costs on local TWD $3 million Production must be at leastIncentives cast and crew (approx. USD $100K) 70 minutes in length

Up to 25% of local pre- Production must be for aproduction, filming, or post- feature or animated filmproduction costs

Production must not beUp to 15% of costs for receiving any support fromtransportation, lodging, and mainland Chinainsurance

Up to a maximum of TWD$20 million(approx. USD $667K)

Support levels arenegotiable for productionsthat would enhance theROC's international image

Taipei City Cash grant Up to the discretion of the N!A Production must be at leastGovernment Fund TFC 70 minutes in length

Production must be shot on16mm, 35mm, or digital filmequivalent

Production must havemarketing and distributionplans in place

Production must either shootin Taipei, be set in Taipei, oruse Taipei post-productionfacilities

2'Z See http://www.taipeifilmcommission.org/en/Grant/Static/6717

.:

Trinidad &Tobago

Trinidad &Tobago offers a production incentive via its agency, the Trinidad &TobagoFilm Company (TTFC). The twin-island state offers the Production ExpenditureRebate Program,273 a cash rebate for up to 35% of a production's qualifying localexpenditure. This incentive is available for film, animated film, television, anddocumentary programs. Only companies incorporated in Trinidad &Tobago can applyfor the program, and these companies must have at least one local resident directorwho must take an active and credited role in the production.

For international productions, the program offers athree-tiered rebate systemdepending on the level of Qualified Trinidad and Tobago Production Expenditure(QTTPE). Projects that spend at least USD $100,000 locally are eligible fora 12.5%rebate, and this number increases to 15%for productions that spend USD $500,000 ormore. The maximum rebate of 35% is reserved for productions with QTTPE of at leastUSD $1 million. No more than USD $2 million can be claimed, creating a maximumrebate of USD $700,000.

Under the Production Expenditure Rebate Program for local projects, the only rebateavailable is 35%. The minimum expenditure for this program is TTD $100,000,274 up toa QTTPE cap of TTD $12.6 million275 or a maximum rebate of TTD $4.41 million.2~6

The types of expenditure that are eligible as QTTPE include the use of local equipment,services, and crews, as well as transport, accommodation and food costs. TTFC alsoreserves the right to evaluate applications with reference to the total estimatedexpenditure in Trinidad &Tobago, the level of employment of local crews, and theportrayal of Trinidad &Tobago in the script. The incentive may be combined with otherfunding programs but those other financial awards are deducted from the production'sQTTPE before calculating the rebate.

Executive Summary

Name Form Rebate Minimum Max Grant Eligible Other RequirementsAmount QTTPE Applicants

Production Cash 12.5% USD $100k USD $700k Trinidad &Tobago Available for film, animated film,Expenditure rebate incorporated television, and documentary

15% USD $500kRebate Program companies, with at productionsfor InternationalCrews

least one locallyresident directorwho takes anactive and creditedrole in theproduction

TTFC reserves authority toaward the grant depending onthe estimated local expenditure,employment of local crews, andportrayal of the state

35% USD $1million

ProductionExpenditure

Cashrebate

35% TTD $100K(approx.

TTD $4.41million

Rebate Program USD $16K) (approx. If combined with other financialfor Local Crews USD $687K) incentives, those awards are

deducted off the OTTPE beforecalculating the grant

2'3 See http://trinidadandtobapofilm.com/incentives.asp2'4 Approximately USD $16K.Z'S Approximately USD $2 million2'6 Approximately USD $687K.

••

The United Kingdom

The Finance Act 2006 sets out the Film Tax Relief (FTR) program that is available tofilm production companies (FPCs). The program is dealt with by the Manchester FilmTax Credit Unit of the HM Revenue &Customs (HMRC) department of the UKGovernment. An FPC is defined as the company responsible for the pre-production,principal photography, post production, and delivery of the film for which relief isclaimed. An FPC must have some active involvement in each of these productionstages, and there can only be one FPC for every film made.277 FPCs are also notrequired to have ownership of the master negative or exploitation rights associated withthe film.

The FTR program has three requirements:

1) the film must be intended for theatrical release;2) the film must meet certain criteria in order to qualify as British; and3) at least 25% of the core expenditure on goods or services for the film

must have been incurred in the UK.

The theatrical release requirement means that the FPC must intend to exhibit the film tothe public at commercial cinema(s). This exhibition can take place in the UK oroverseas, but the FPC must intend fora "significant proportion" of the earnings from thefilm to be obtained via this exhibition.278 The FPC's intention is assessed at the end ofeach accounting period, and HMRC has indicated a number of factors that may count infavour of an FPC intending a theatrical release.279

The British qualification requirement tasks films with passing a cultural test based on apoint system.280 The test is administered by the British Film Institute, which makesrecommendations to the Department for Culture Media and Sport that ultimately certifiesqualifying films.

Finally, 25% of the FPC's core expenditure on the film must be in relation to goods orservices that are used or consumed in the UK. This estimation generally includes allproduction costs but excludes all development and distribution costs.281 The coreexpenditure also cannot include any financing and interest costs, completion bond anderrors and omissions insurance, entertaining costs, marketing and publicity costs, orprint and advertising costs.

The FTR takes one of two forms: an additional deduction against taxable profits, or apayable cash rebate known as a Film Tax Credit (FTC) if the additional deduction

27 Additionally the definition of FPCs excludes films that are made in a legal partnership. For moreinformation see http://www.hmrc.gov.uk/manuals/fpcmanual/FPC10110.htmZ'8

The significant proportion is not statutorily defined, but the HMRC has indicated that it will acceptintentions for at least 5% of the total estimated income as meeting the statutory requirement.279 These factors include the finance plan, whether or not the film is the normal length of a featurenormally shown in cinemas, the terms of the agreements with cast and crew, and any indications of theintent to acquire a contract for theatrical release.280 For more information on the cultural test, please visit http://industry.bfi.orq.uk/culturaltestZ$' HMRC distinguishes between development and production on the basis of whether or not theexpenditures are "speculative." This generally has been understood to mean that only costs incurred aftergreen-lighting may be claimed as production costs.

creates or increases a surrenderable tax loss. In both cases the amount available iscalculated based on the size of the total production budget and the "enhanceableexpenditure," which is the lesser of either:

- 80% of the total expenditure on the qualifying film, or

- the total UK expenditure.

If the production budget is £20 million282 or less then the production can either claim anadditional deduction of 100% of the enhanceable expenditure, or an FTC of 25% of thesurrenderable Ioss.283 Conversely, if the production budget is above £20 million then theproduction can either claim an additional deduction of 80% of the enhanceableexpenditure, or an FTC of 20% of the surrenderable loss.284 There is notably no cap onthe amount that can be claimed as FTR.

The UK is a party to the ECCC, and also has nine bilateral co-production agreementscurrently in place.285 Any productions that meet the requirements of these co-productionagreements are eligible for the FTR and are not required to qualify as British via thecultural test.

Executive Summary

Name Requirements Forms Available Amounts Available

Production must qualify as Additional deduction against If the total production cost isBritish taxable profits £20 million or less (approx.

USD $31.4 million), 100% ofProduction must be intended the enhanceable expenditure,for theatrical release which is the lesser of f a) 80 /o

25% of core expenditure on of the total production cost, or

production must be spent in b) the total UK production

the UK expenditure

If the total production cost isabove £20 million, 80% of theenhanceable expenditure,which is the lesser of a) 80%of the total production cost, or

Film Tax Relief b) the total UK productionexpenditure

Film Tax Credit, i.e. a payable If the total production cost iscash rebate £20 million or less (approx.(available where the USD $31.4 million), 25% of theproduction results in a loss lesser of a) total loss resultingbefore/after the additional from the production, or b) thededuction) enhanceable expenditure

If the total production cost isabove £20 million, 20% of thelesser of a) total loss resultingfrom the production, or b) theenhanceable expenditure

ZsZ Approximately USD $31.4 million.283 The surrenderable loss is the lesser of either the loss that is created or enhanced by the additionaldeduction, or the enhanced expenditure; for more information seehttp://www. hmrc.gov. uk/manuals/fpcmanual/FPC55100. htm

For additional information see http://www.hmrc.gov.uk/manuals/fgcmanual/FPC55110.htm285 For more information on UK co-production agreements see http://industry.bfi.org.uk/coproduction

Documents

TAX CREDITS AND OTHER FILM AND TV INCENTIVES: THE … · tax credits and other film and tv incentives: the world outside canada and the united states the american bar association