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Location shoots flee France

Rebate caps make foreign sites more attractive

France’s reputation as a pricey, bureauracy-laden land for foreign shoots has eased lately with the year-old rebate for international films.

But while France is luring a growing number of foreign shoots, Gallic productions are increasingly moving to Germany, Belgium, Luxembourg or Canada to tap into these countries’ generous tax shelters.

France’s tax rebate for French-speaking films has been capped at e1 million ($1.4 million) since its inception in 2004; meanwhile, the tax incentive for international shoots, which was implemented in January, enables foreign producers lensing in Gaul to seek up to $5.3 million in rebates.

And the bulk of Gallic producers claim the tax shelter for foreign productions is now far more attractive than the one for French-language pics.

“When the tax rebate for French-speaking films was adopted in 2004 we noted a significant drop in runaway shoots and the number of productions went up — but that was six years ago,” says Patrick Lamassoure, managing director of Film France. “In the meantime, other European countries like Belgium, Germany or Luxembourg have been reactive and have adapted to the current economic environment, by making their incentives more attractive to outward productions.”

Adds Lamassoure, “And Eastern European countries like the Czech Republic and Hungary have created their own tax shelters.”

Gaul’s productions levels may remain stable, but the investments have been significantly dropping since 2009. That’s because there are more films with tiny budgets and less higher-bracket pics being produced, says Serge Siritzky, director of trade mag Ecran Total.

Investments dropped 26.3% to $1.4 billion in 2009 and 7.2% to $604 million over this year’s first semester. And the average budget for a French film fell to $6.64 million compared with $8.03 million during last year’s first half. In fact there’s even less than 10% of French films with budgets above $12.8 million.

Many French insiders blame this drop in investment on the growing numbers of runaway shoots.

A slew of films budgeted in the $60 million-range, notably Juan Solanas’ “Upside Down,” Alain Chabat’s comicbook-based “Houba: The Marsupilami and the Orchid of Chicxulub,” shot abroad this year. “Upside Down” filmed and is doing the post-prod in Canada. “The Marsupilami” briefly shot near Paris, before shipping to Belgium and Mexico, where the comicbook is set. There are also rumors that “Asterix in Britain,” a large-scale pic set to shoot in 3D, is likely to lense overseas.

For higher-bracket films or features with lots of visual effects, Canada has one the world’s best tax shelters, says “Upside Down”‘ producer Dimitri Rassam. “Not only there’re no caps, but Canada has wonderful crews and it’s only a six-hour flight from Paris.”

Adds Rassam, “We couldn’t have made ‘Upside Down’ without the French funding system but there was no way we could have shot there because the tax rebate is not attractive enough.”

Meanwhile, Franck Mettre, post-production supervisor at La Petite Reine, the outfit behind Christophe Gans’ $68 million “Fantomas,” says he’s touting Belgian and Canadian outfits to work on “Fantomas.”

“It’s not a question of skills because we do have great talents working in visual effects and animation in France,” says Mettre. “But the lack of attractive rebate for French-language films is a big handicap .”

The dearth of local financing sources also is driving producers with mid-range budget films to relocate.

Indeed, regional subsidies are being slashed throughout France and TV channels have dropped their investments in French films. So Gallic producers are looking to squeeze budgets down — either by limiting shooting length or by relocating, says Film France’s Lamassoure.

For most mid-range pics, Belgium is Gaul’s No. 1 rival. Arthouse shingle Haut et Court’s previous two pics, Gilles Marchand’s “Black Heaven” and Bouli Lanners’ “Giants” are set up as French-Belgian, and France-Belgium-Luxembourg co-prods, respectively, and both shot in Belgium.

Francois Ozon’s hit comedy “Potiche,” produced by Mandarin Cinema, also filmed in Belgium.

As in Canada, there’s no language barrier and it’s close enough to France. Plus, the Belgian tax rebate is particularly attractive; not only because it’s capped at $5.2 million, but also because it’s far less constraining than the Gallic incentive.

“In France, theoretically, you can deduct 20% off your expenditures but in practice the rebate only leaves you a 10% budget margin; In Belgium, on the other hand, producers can typically save 30% of their budget,” says Gregoire Sorlat, co-founder of Why Not Productions (“A Prophet”), who nevertheless is opposed to the idea of relocating shoots to Belgium for various reasons.

This relocating trend has already impacted the technical service industries sector, as well as the local economy.

Some film crews and post-prod houses have had to cut down their rate to 25% to 30% to keep projects, per an industry insider.

And a few post-prod houses, including TSF and Mikros Image, have opened offices in Belgium to avoid missing out on French projects.

The strategy’s paid off for Mikros Image. The vfx vendor was tapped to work on “Largo Winch 2,” a higher-bracket French majority co-prod.

And now that French producers are loading up on higher-bracket 3D toons and live action projects, many Gallic industryites are stressing the necessity to raise the rebate cap above the current $1.3 million.

“We’re currently working on an amendment along with Film France and we’ll present it this month to the Senate,” says trade org Ficam’s prexy, Thierry de Segonzac.

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