Europe rethinks film subsidies

European Commission plans incentives cap

BRUSSELS — The European Commission has proposed caps on how much public subsidy money can be used to tempt foreign film production to the region.

The aim is to prevent European countries from using subsidies to compete among themselves for prestigious Hollywood projects.

Non-Euro filmmakers bringing productions budgeted below €10 million ($13 million) to Europe will be allowed to draw up to half their coin from local subsidies, the same allowed to local films.

But aid for foreign films with budgets between $13 million and $26 million would fall to 30%, and drop to just 10% for films budgeted above $26 million.

“Setting a cap will ensure that other parameters for the location decision-making, such as the quality of local crew, stages and technology remain decisive, and that competition takes place primarily on the basis of quality and price, rather than on the basis of state aid,” the Commission said in a policy document proposing the limits.

The proposals, released for consultation Wednesday, are part of a review of Euro law on subsidies for film production. The current rules, set in 2001, lapse at the end of this year.

The proposals also suggest loosening territorial requirements in incentive schemes. This will give producers greater freedom to combine subsidies across the region.

Subsidy schemes usually demand that productions invest a minimum amount locally to receive government coin. Under present rules that can be up to 80% of a film’s production budget.

The Commission wants to limit such pre-conditions to the amount of subsidy on offer. This means governments will only be able to insist on recovering their investment, but not use the system to lock in a greater return or lock out other territories.

While this will make it easier for films to get into the competition for subsidies, success is not guaranteed. Selection committees will still be free to favor projects that offer the most attractive local returns.

Schemes that use local production spending to work out the level of subsidy, such as tax breaks, will have to take into account all production spending in the European Economic Area when calculating awards. Such schemes will still be allowed to insist that 100% of the tax incentive is spent in their territory, however.