Film tax credit, national lottery to continue

As the U.K. begins to wind down its film council, a debate is emerging over whether there are other models that might be more effective in spurring that nation’s film industry.

For Blighty’s new coalition government, the motive for abolishing the U.K. Film Council was straightforward: It had annual overhead of £3 million ($4.7 million) — money that should go back into British films.

Even as a host of industryites including Clint Eastwood, Emily Blunt, Ralph Fiennes and even execs at DreamWorks have expressed concern, the government has pledged to continue the 20% film tax credit and the $48.3 million of national lottery funding for film. That lottery figure is expected to rise to $51 million after 2012.

While the U.K. waits to see what model will replace the UKFC when it closes its doors in 2012, what could Blighty learn from its European neighbors?

Since 2009, France has offered a 20% tax rebate for foreign features and TV productions, capped at €4 million ($5 million). This lured Woody Allen, who lensed “Midnight in Paris” in Gaul, while Martin Scorsese and Eastwood are skedded to shoot in the region soon.

It also nurtures local talent via its public administrative organization, the Centre National de la Cinematographie, a separate and financially independent entity that supports the country’s film and TV biz.

“If you want a successful organization in terms of one that looks after its own film industry with skill and huge funds, it definitely has to be the CNC,” said “The Last Station” producer Chris Curling.

French-language pics shot in French are given an advance on ticket sales, entitling filmmakers to a percentage they can put back into future productions. “Their overriding concern is to support their own film industry,” Curling said. “Whereas in the U.K., the overriding concern of the Dept. for Culture Media and Sport is attracting films from America rather than supporting the local film business.”

The biggest difference between the U.K. and France is the 10% of annual revenues broadcasters must spend on local films — a huge benefit to the local industry.

In 2008, paybox Canal Plus alone spent $260 million on homegrown pics. By comparison, the BBC’s budget for films this year is just under $19 million, while the film arm of commercial-hybrid pubcaster Channel 4 will spend $15.5 million.

In Spain, national subsidies are driven by a film’s box office take, its budget and producers’ investment.

The national film funding board, the Instituto de la Cinematografia (iCAA), reimburses 15% of pics’ gross, and $1.28 for every $3.85 of producers’ investment if a film costs more than $2.6 million and sells 60,000-plus tix in Spain.

Adding to national incentives, regional subsidies can — in Catalonia — reach a maximum $2.6 million.

The iCAA recently cut the maximum coin a pic can receive from $2.6 million to $1.9 million and is encouraging producers to court 18% tax rebates available for private investors.

As in France, broadcasters in Spain are obliged to invest in local pics, essential to the territory’s biz.

“I support the Spanish industry 100%,” said producer Juan Gordon (“The Appeared,” “Cell 211″). “I think it’s working. Between the subsidies and the fact that broadcasters are major supporters, which is essential, there’s a clear aim to support the industry.

“Basically, the spirit of the Spanish law is, ‘Let’s make it easy for the producer,’ so if film qualifies under Spanish laws, we’ll accept any of those to improve co-production.”

Ireland has increasingly become an attractive place for co-producers thanks to its 28% tax break and a cultural test to prove a pic’s “Irishness” that is less restrictive than similar tests used in France and the U.K.

It offers international development loans through the Irish Film Board that enable Irish producers to tap into subsidies for projects that they are working on with overseas producers.

Ireland also has entered into official co-production arrangements with Australia, New Zealand and Canada in which a film or TV production that is approved as a co-production is eligible to qualify for programs of assistance in each country.

“The Irish model has worked wonders for that country’s film economy,” said F&ME producer Mike Downey. “You would find it hard to find a naysayer as to the effectiveness of the Irish Film Board among its constituents.”

In the past five years, some 45 Irish co-productions have been made including Paolo Sorrentino’s upcoming “This Must Be the Place,” with Sean Penn, and Colin Farrell starrer “Triage.”

“The failure to ally ourselves to Europe, like Ireland has done, has been a financial and creative mistake for the U.K.,” said Downey. “If producers could have a financial tool — it could be a tweaked version of the tax-credit — that encouraged European co-production, British producers could set up and become a part of a highly effective and reliable network of the European film industry that is thriving.”

Germany has an advanced cultural policy that has seen a boom in recent years for both domestic and international production. The $80 million-a-year German Federal Film Fund (DFFF) offers grants for production costs, subject to certain conditions. Subsidies in the country are largely about getting business in local areas.

“What’s interesting about Germany is that it is totally opposite to the U.K.,” said “The Wind That Shakes the Barley” producer Rebecca O’Brien. “It actively supports films that are being made largely outside of the region, which is something we don’t do. Just some of it has to be made there.”

O’Brien suggests a European co-production fund could be just the tonic to boost the biz.

“The U.K. is ignoring an important area of cross-fertilization,” she said. “Obviously the U.K. makes more out of supporting production that is Atlantic-facing because the films bring in much more high-profile money. But this is a short-sighted, blinkered view. Now, the U.K. needs to think more longterm because we have the unique opportunity to have our feet in both camps.”

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