France has Europe’s biggest national film industry with a €1.4 billion ($1.8 billion) production spend in 2011.

Its closest rival is the U.K., but there’s a key contrast. Whereas studio-financed features contribute 80% of British production spend, they represent less than 8% of French expenditure.

“We already have a very strong national film industry. We’re very keen on having a strong international sector,” says Ile de France Film Commission’s director Olivier-Rene Veillon.

Gallic bizzers have addressed this issue in various ways, including the construction of the modern Cite du Cinema megastudio just outside Paris.

In addition, to attract more shoots and keep pace with its neighbors, France launched a 20% tax rebate program for domestic features in late 2004 with a €1 million cap, and then in late 2009 introduced a separate 20% incentive for outside productions — called the Tax Rebate for Intl. Production, or TRIP — with a €4 million cap .

TRIP has been particularly important for animation and vfx production, with fully 50% of the $155 million in tax rebates granted in 2010 going to pics such as “Despicable Me,” “Thor” and “The Lorax.”

TRIP also attracted major live-action shoots in its first 12 months — including “Hugo,” “Midnight in Paris” and “Sherlock Holmes: A Game of Shadows” — but Hollywood’s interest in shooting in Gaul has since waned, due to a strong euro and competition from tax incentives elsewhere.

Line producer John Bernard, who has handled seven out of 41 TRIP projects approved to date, says two major studio shoots were canceled in 2011 due to the high value of the euro. “Fast and Furious 6,” which was originally slated to lens in Marseilles, was relocated to Spain due to the latter’s bigger tax rebate.

Then there’s the issue of runaway domestic production, which is fleeing France for locations such as Belgium, which offers a 40% tax rebate. Reducing this flight is a major priority for the French film biz.

With Gaul being a major European co-producer, foreign spending has traditionally represented around 16% of below-the-line expenses for French films, but Patrick Lamassoure, head of Film France, believes that since late 2010 that figure has risen to 35%.

“Ideally, we need to raise the caps on tax rebates” says Lamassoure. “Perhaps €10 million ($13 million) for TRIP projects and €2 million-$3 million ($2.6 million-$3.9 million) for French co-productions.”

“Smaller countries offer tax rebates to attract production from larger countries, but don’t offer additional investment,” says Thierry de Segonzac, prexy of Ficam, the French technicians’ association.

Proposals unveiled by the European Commission in March aim to rein in the subsidy war between EU member states by harmonizing tax rebate schemes, establishing lower caps for non-EU shoots and clamping down on territorial spending requirements.

This proposal has generated fierce industry and governmental opposition, especially from the U.K., France and Germany.

“If the rule that €1 of subsidy means a maximum of €1 in local spending, then all subsidy systems will collapse, because politicians won’t back these systems,” Segonzac says.

Attempts to revise TRIP are further hampered by Europe’s general economic crisis and the fact that it’s an election year in France.

Local players nonetheless emphasise the benefits that have already been generated by TRIP.

“Tax rebates have revolutionized the film industries in Belgium and Germany over the last 10 years,” says financing specialist Leonard Glowinski. “The new system is breeding a new generation of filmmakers in France.”

Scout & About: Paris/Ile de France 2012
TRIP’s next step is going abroad | Besson-built studio beckons bizzers | Pushing local biz, pulling int’l prods
Case Studies
‘Chinese Zodiac’ | ‘Despicable Me” | ‘Odd Thomas’