MADRID — The big buzz at last week’s Madrid de Cine-Spanish Film Screenings wasn’t on a film, but new tax breaks.

For years, Pedro Perez, prexy of Spain’s Fapae producers association, has railed about the importance of such tax breaks, seemingly in vain. Then, quite suddenly, on June 1 they were approved by Spain’s Council of Ministers.

A wave of optimism is sweeping Spain’s normally dejected producers.

“I’ll be the first to apply,” Maestranza’s Antonio Perez said at Madrid de Cine, almost jumping off the ground in excitement.

“I’m advancing on a production slate. If the law plays out, this could be a good opportunity,” added 30-year-industry vet Luis Angel Bellaba.

Embedded in a draft film bill, the breaks still have to be fast-tracked through parliament by year-end. But the provisions, which run through 2011, certainly have some producers interested.

As they currently stand, the breaks are deductions, levied at 18% on investment and open to producers, broadcasters and nonfilm financial investors teaming in so-called Agrupaciones de Interes Economico (AIEs).

“Imagine a large company whose taxable profits run at $100 million,” producer Ibon Cormenzana explains. Paying 30% corporate tax, its tax bill is $30 million. Investing, say, $10 million in Spanish films, it triggers a $1.8 million writeoff.

Taxes generating breaks can be derived from any activity, not just filmmaking.

Losses on film investment can also generate tax deductions, Pedro Perez adds.

But the scheme won’t solve all Spain’s problems. It still leaves investors on the hook for 82% of investment. AIEs must seek likely cumbersome government authorization for investments, and Spain’s film industry boasts few financially savvy suits; its financial and film communities regard each other with mutual incomprehension.

“The trick will be to draw down subsidies, TV coin and presales to offset risk,” Cormenzana says.

Fapae has commissioned a study from Ambers, a financial consultancy, to advise on how breaks can change film financing and recoupment in Spain, Perez tells Variety.

The potential new shelter could also be important for producers outside Spain.

For much of this decade, higher-end Spanish pics, structured as U.K.-Spanish co-productions, have taken advantage of British sale-and-leaseback coin, aiding films such as “Manolete.”

With Britain’s new tax credit regulations demanding British investment, the U.K. solution is less attractive.

“If (Spain’s) breaks go through, we might be able to take films to Spain as we currently do to Hungary, tapping Spain’s large talent, creating co-productions and mixing breaks with subsidies and, say, Ciudad de la Luz Studios rebates,” says Carola Ash at London’s Future Films.