France, Italy lure Hollywood

Tax incentives used to boost local industries

France and Italy, Europe’s bastions of national filmmaking pride, have long fought Hollywood’s presence on their movie screens with dogged protectionism.

Now both countries are busy breaking those barriers, looking to lure U.S. productions with imminent tax incentives as a means to boost their local industries.

While Italy in the 1950s and ’60s served as the location for a slew of partly subsidized Hollywood sword-and-sandal epics, for France, incentives to foreign productions are being hailed as a historic first.

Levied on 20% of expenditure in Gaul, and capped at $5.3 million, French tax rebates for U.S. and other foreign shoots look set to kick in by July.

Italian tax credits, expected to be in effect by June, will provide international productions a 25% deduction with a E5 million ($6.6 million) cap.

The tax credits are seen in Italy as a fresh start after decades of decline prompted by a 1967 protectionist law that halted the studio practice of tapping into local incentives. It ended the golden era in which Rome’s Cinecitta Studios became known as Hollywood on the Tiber and drove away great Italian producers of the day, including Dino De Laurentiis, who left Italy and set up shop in L.A.

At Cinecitta, where the weak dollar has caused a three-year dearth of long-term Hollywood shoots, the hope is that tax credits will have an effect similar to what happened to Berlin’s Babelsberg Studios in 2006 when Germany introduced incentives for foreign productions that put Babelsberg’s balance sheet back in the black.

Babelsberg, significantly, is where “Inglourious Basterds” did the bulk of its shoot, rather than France, where the Quentin Tarantino pic is set, since the Weinstein Co. went for the German incentives.

“Everybody wants to shoot in Italy; now that we have incentives and the dollar is stronger, they will,” Cinecitta general manager Maurizio Sperandini maintains.

The massive Rome studios, with 30 soundstages and a total of 300 acres of backlots among its various outposts — including a new facility in Morocco — are known for skilled craftsmen, set and costume designers; Rome, like Paris, also offers great hotels, food and quality of life.

But Sperandini is keeping his expectations conservative. His main goal is for Cinecitta to return to the production levels before the dollar deluge when his studios hosted pics such as “Gangs of New York” in 2002, “The Life Aquatic With Steve Zissou” and “The Passion of the Christ” in 2004, and HBO’s “Rome,” which occupied its backlot between 2005 and 2007.

More recently, Spike Lee’s “Miracle at St. Anna” and Rob Marshall’s “Nine,” which was based at London’s Pinewood Studios, shot at Cinecitta, but very briefly.

With France lacking a large-scale studio like Cinecitta, films usually come to the country only to shoot uniquely French locations. But Gaul can deliver on other fronts.

“France produces north of 180 majority French features a year,” Film France’s Patrick Lamassoure says. “This makes a big difference in know-how — the ability of French production to deliver international mainstream content — action films and thrillers, for example.”

The rebates could have a major impact on both the European and American biz.

“The finance divisions of the studios will immediately consider France as a possible location, because it’s become part of a group of countries offering discounts for shoots,” says John Bernard, line producer in France for “G.I. Joe: The Rise of Cobra,” “Transformers: Revenge of the Fallen” and “Inglourious Basterds.”

Mario La Torre, an economics professor who drafted the Italian incentives, points out that 30% of the spend can be invested in another European country and still qualify for the Italo tax credit.

“The idea is to avoid excessive localization and competition within Europe, and also, from our perspective, to favor productions with a broader international scope,” La Torre says.

Incentives in Italy and France could cement a growing trend for internationally themed shoots — think the “Bourne” pics — which combine several Euro locations, taking advantage of various rebates.

Of course competition, especially with drastically cheaper Eastern Europe, is what prompted France and Italy to offer incentives to outsiders in the first place.

Rome-based American line producer Robert Bernacchi, who works in both Eastern Europe and Italy, says Italy probably won’t become competitive “dollar for dollar” with countries like Hungary, where Universal shot “Hellboy II: The Golden Army.”

“But the studios have lots of films in development that are either set in Italy or have some reason to come to Italy but could not get the bottom line low enough. Those numbers will finally start to add up,” he says.

“Finally we can return to making movies with mixed settings and casts,” says Italo producer Riccardo Tozzi, whose Cattleya recently forged a pact with Universal. “This will give Europe an edge in the international marketplace.”