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Spain Announces 15% Tax Break for International Shoots

But massive Spanish tax-break investment on big Hollywood productions may end

MADRID – Spain’s government has announced its intention to extend a 15% rebate on Spanish expenditure to international shoots lensing in the country.

That’s the good news. But, outlining new tax provisions, Spain’s ruling Popular Party has made very clear its intention to clamp down on tax-break systems that allowed Hollywood tentpoles – Warner Bros.’ “Wrath of the Titans,” Universal’s “Fast and Furious 6” – to set up camp in in the country and tap into local tax-break investment reportedly saving the studio $20 million in the case of “Furious 6.”

How attractive Spain can now be as a locale for foreign shoots in another question.

Spain’s Company Tax Reform Bill, presented by tax minister Cristobal Montoro, now has to debated by parliament, where multiple amendments could be introduced. It could take months to hit the statute books. That leaves a lot of room for negotiations.

But the government’s initial, low-balling proposals on Tuesday have deflated Spain’s local industry and international shoot services industry that expected a far more generous new tax regime.

Per Montoro, the new 15% rebate for international non-Spanish shoots will be capped, crucially, at €2.5 million ($3.4 million) per film.

Incorporating local elements that allowed them to successfully claim Spanish nationality, “Wrath” and “Furious 6” had no cap at all on tax-break investment.

The nationwide tax break on investment in Spanish nationality movies will edge up from 18% to 20%, Montoro intimated. But only on the first million euros ($1.4 million) of investment, giving Spanish movies just a $27,200 gain. It will also be capped, crucially, at $4.1 million per production.

In comparison since September, France’s Tax Rebate on Intl. Production (Trip) has run at 20% of local expenditure in France and has a $13 million ceiling per foreign movie. Germany’s DFFF rebates can, in exceptional cases, reach as high as $16 million.

Spain’s Ministry of Culture had given to understand that tax breaks in Spain could rise to as much as 30%, in compensation for slashed straight subsidies for local production. Its local industry had expected caps, but not as low as $4.1 million per movie.

Domestic producers will now attempt to negotiate higher percentages and raised ceilings.

If they succeed, Spain could still remain in the game for shoots that combine lensing in the Canary Islands – which offers 38% breaks – or for shoots seeking Spanish locations roll at least several weeks in Spain.

“If” is of course a word industries hate. Spain’s highest-rolling producers look set to wait-and-see how at least the new Company Tax Reform Bill plays out in parliament before deciding whether they need to recast financing on their highest-bracket projects.

But the rock-and-roll days of massive tax breaks for Hollywood look to be over.

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