Competition renews tax-break talk

Spotlight: Czech Republic

The Czech Republic is edging toward introducing tax incentives for filmmakers — and not a moment too soon, as the industry struggles against increasing regional competition.

Spurred by intense showbiz lobbying — and the publication two years ago of a report on the economic benefits of tax breaks backed by the country’s culture ministry and film commission — trade and industry officials in Prague are drafting a discussion document that could form the basis of a new law.

“We have analyzed the possibility of supporting the film industry through fiscal incentives (that would rebate) 20% of money spent here and shall be discussing this with other ministries and involved parties,” a Czech trade and industry ministry spokesman says.

The move comes after years of inaction by Czech officials who consistently dismissed demands to use public money to help stimulate the country’s role as a center for international co-productions.

Once considered the cheapest and best location for runaway Hollywood productions, the Czech Republic’s pole position has been eroded by a spike of the koruna that has mirrored the decline in the dollar. Aggressive marketing by cheaper locations such as Bulgaria and Romania, and the introduction of generous 20% tax breaks on local film spend in neighboring Hungary and Poland have also taken a toll.

Lack of incentives were blamed for the loss of “The Golden Compass,” which pulled out of Prague’s Barrandov Studios after penciling in space; the “Hellboy” sequel, which was lured to Budapest’s Korda Studios by the country’s 20% tax break; and more recently the James Bond sequel “Quantum of Solace,” which went to England’s Pinewood Studios.

The government has not been receptive: Two years ago, with the stroke of a pen, Czech President Vaclav Klaus killed a film law that had been eight years in the making, when he exercised his power of veto on the eve of a parliamentary vote that would have gone in favor of it.

Film is a “commercial business that should not receive public money,” Klaus said.

Unbowed, Czech producers helped set up a film council to lobby for a new law, with London’s Olsberg SPI brought in for the economic study.

Ludmila Claussova of the Czech Film Commission — which is at Locations Expo for the first time thanks to support from the culture ministry and Prague city council — says trade and industry department support for tax incentives was significant.

“The Czech film industry has achieved its exceptional status with scarcely any support from the state,” Claussova says. “We need this support now.”

Matthew Stillman, managing director of Barrandov-based Stillking Films, says the Czech Republic remains competitive when all factors are taken into consideration. “Local Czech costs have hardly increased at all, but, like many other destinations, the costs are affected by the dollar’s value,” Stillman says.

His company has worked on many international co-productions, including Russian director Timur Bekmambetov’s “Wanted,” starring James McAvoy, Angelina Jolie and Morgan Freeman.

“Productions always have a choice of where to shoot, and the reason why the Czech Republic continues to compete very effectively is the strong film infrastructure in terms of producing support, crews, equipment, locations and studios,” Stillman says.

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