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Producers will pitch tax plan to Schroeder

Proposal includes sales-and-lease-back scheme

BERLIN — German Chancellor Gerhard Schroeder will meet local producers at the Berlin Film Festival today to hear their case for new tax regulation that would entice investors to back Teutonic film.

However, initiative would mean the end of existing investment funds that have for years funneled German money to Hollywood while giving Teutons a nifty tax shelter.

Some industry observers reckon the plan, pushed by federal culture minister Christina Weiss, has a good chance. The fact that Schroeder has scheduled the meeting is a positive sign.

Weiss’ plan would introduce a sales-and-lease-back scheme allowing producers to sell a film to investors and then lease it back. Investors would be able to write off their investment if at least 35% is spent on the local industry.

However, the scheme would prevent investors who put their money in funds that back foreign productions from writing off losses — until now the overriding rationale to invest in such funds.

This could make business tougher for such Hollywood-based producers as Avi Lerner of Nu Image-Millennium Films.

Lerner’s lineup at the Berlinale’s European Film Market, including Brian De Palma’s “The Black Dahlia” and Bruce Willis actioner “16 Blocks,” was bankrolled by German production fund Equity Pictures.

Lerner regularly partners with Teutonic funds, including Germany’s most successful film investment vehicle, VIP. He believes the government should make it easier for international producers to work in Germany, not harder.

Lerner said local films should stand on their own merit. “It’s good to invest in German films, but if a German film is going to be successful, it has to appeal to an international audience, otherwise it won’t sell.”

Equity topper Andreas Thiesmeyer said his company wanted to finance German films but that the proposal was counterproductive and predicted it would hurt the industry.

In the meantime, Lerner’s company is reaping the rewards of German-backed production. He just sold a number of pics to France’s Metropolitan, including the Equity-backed “16 Blocks” and “Lonely Hearts,” with John Travolta, plus Bruce Beresford’s “Contract,” which was bankrolled by VIP.

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