BUDAPEST — After months of uncertainty the Hungarian film industry breathed a sigh of relief following a recent European Commission (EC) decision to approve its tax-incentive program.

Industry insiders admit there was concern the EC might not ratify an amended Hungarian Film Law passed in June because of its tax scheme.

But Brussels surprised Hungarian producers by ratifying the 20% rebate contained in the original law, and ordering Budapest to extend tax incentives to include costs incurred by productions while shooting outside Hungary.

“Frankly, I think the new scheme is an improvement,” says Andras Simonyi, chairman of Korda Filmstudio, Hungary’s largest studio complex, located just west of Budapest. “In this competitive world, the expanded incentives (of national and foreign tax deductions) are a good combination.”

The film law and its tax plan have been part of an ambitious initiative by the Hungarian government and the film community to become a cinematic powerhouse on the continent.

Long languishing in the shadow of Prague, Hungary is battling to become the first choice for producers from Asia to London to Hollywood that are intent on filming in central Europe.

The legislation also underscores a rare partnership between business and politics. While lawmakers were writing and then amending the Hungarian Film Law, local entrepreneurs such as Robert Szabados (co-founder of Stern Film Studio) and Sandor Demjan (founder of Korda Studios) have been investing in the nation’s cinema infrastructure.

Nowhere is the easy partnership between politics and business more apparent than at Korda, which appointed Simonyi, former ambassador to the U.S. and NATO, as its chairman.

Like Hungary’s other film companies and studios, the E100 million ($145.4 million) budgeted Korda Studio is hoping that Hungary’s tax law will pique foreign interest in the country as a European backlot and cinema service center.

Korda is advertising the newly expanded tax scheme as a 25% total rebate to customers, and the studio celebrated Brussels’ announcement last week by holding a street party on the backlot of the same New York set where “Hellboy 2” was recently shot.

But the EC also approved a 32-point cultural test for Hungary that a film must meet to be eligible for incentives. Films must contain Euro content or culture, with additional points if European nationals are either making or financing the movie.

Productions must earn at least 16 points to pass. Although some producers are less enthused, one film industry rep considers the criteria “broad,” and says “most productions looking for a European location meet it without any problem.”

News spread rapidly that Brussels had backed the tax incentives, and Hungary is again open for business.

Amy Szabados, managing director of Hungary’s Stern Film Studio & Media Center, says ratification of the film law immediately persuaded a U.K. production company to bring a television series to her studio.

Judit Romwalter, manager of Budapest-based Sparks Camera & Lighting, says Hungary’s facilities will expand and grow as a result of the tax breaks contained in the film law.

“This is a great law,” says Romwalter, who notes she has seven productions either in process or in the pipeline. “It’s one of the best in Europe.”

But what about benefits that tax breaks can’t influence, such as locations and skilled crews?

Sparks is working with the Hungarian Society of Cinematographers to educate lighting and camera crews. Stern also has plans to train crews and technicians.

And Magyar filmmakers say Budapest’s Hapsburg-era architecture has always made it a popular location spot, most recently serving as Paris during the shooting of the HBO series “John Adams.”