Chancellor Schroeder gets cabinet greenlight to nix tax-haven funds.

One more tap may soon be cut off for Hollywood moviemakers.

German public film funds, which have funneled upwards of $500-$700 million a year to the studios, may be shut down because of political maneuvers.

Estimates are that Paramount and Sony have been the biggest beneficiaries over almost a decade of these funds, but that some 15% of all U.S. production money since 1997 has come from German sources.

Studio execs have been looking elsewhere, mainly at domestic equity funds and debt packagers, to offset the eventual dry tap from the heart of Europe.

German Chancellor Gerhard Schroeder got a cabinet greenlight last week to nix the tax-haven funds.

Teutonic funds have helped finance epics like “Alexander,” “The Aviator” and “The Lord of the Rings” trilogy.

But with economic stagnation plaguing Germany, there is little sympathy for investment vehicles that seem primarily to support the U.S. film industry.

“We should have a better picture of what’s going on in June,” says Andreas Schmid, head of Germany’s biggest film funder, VIP Medienfonds. That fund backed upcoming pics like “The Illusionist,” with Edward Norton, and “All the King’s Men,” with Sean Penn.

Parliament is likely to approve the proposal in June. Some money from private German funds will not be affected by the bill.

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