Revision to EU incentives postponed to next year

PARIS

European film industryites can breathe easily again, at least for now: the European Union’s exec body, the European Commission, has postponed its revision of the Cinema Communication regulations, which bizzers say would restrict or nix tax rebates and coin for international co-productions and big budget movie projects.

Having faced fierce opposition from film bodies and high-ranked players, the EC has delayed the adoption of the legislation, which was due to go before Parliament by Dec. 31. A spokesperson for the Commission declined to give further information.

First created in 2001, the Cinema Communication policy has been under review since March when bureaucrats in Brussels decided to revise it in order to level out state aid across Europe, and stop the subsidy race between countries like France and Germany, which have been luring major film projects thanks to attractive tax rebates and generous subsidies. These incentives include local spending obligations, which are at the crux of the dispute.

Big-budget Hollywood productions are being targeted by the EC, which has blamed them for fueling the subsidy race and grabbing a large share of coin. “As the amounts of aid for major international productions can be very high, the Commission will (…) ensure that competition takes place primarily on the basis of quality and price, rather than on the basis of state aid,” stated the EC in its latest draft of the Cinema Communication.

France has been on the EC’s radar for years: Gaul’s film funding schemes account for the largest share of the estimated Euros2.3 billion ($3 billion) in film support granted by EU states, and have the strictest territorial spending obligations.

One of the latest drafts of the Cinema Communication regs caused uproar because it suggested that territorial spending obligations should be based on the amount of the aid awarded, rather than on the complete production budget. At present, the vast majority of film funding programs require producers to spend 80% of the production budget within the country offering the incentives.

Patrick Lamassoure, co-managing director of Film France Commission, said, “Any state that grants one euro to a film for a one euro in local spending would in the end give up supporting film production.”

He added, “Every year, European tax rebate programs represent an estimated Euros 700 million ($908 million), and more than 80% of that benefited European films; consequently, if we eliminate tax incentives, it will cut 15% of all European film production.”

Film bizzers are now expecting the final draft of the revised Cinema Communication regs to come out in the first quarter of 2013, and they’ll be hoping that the EC puts the extra time to good use.

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