Central Europe Jumps Onto Incentives Bandwagon

Tax breaks atop low costs boost production throughout the region

In the 10 years since Hungary introduced its production incentives, it has emerged as the leading country in Central and Eastern Europe in the race to pursue Hollywood blockbusters and upscale TV series.

Boosted by the 20% tax rebate, the local biz has been further strengthened by the opening of production facilities, such as Korda Studios, Stern Film Studio and Media Center, and Raleigh Studios.

For Hollywood producer Andy Vajna, who is also the Hungarian film commissioner, it is not just a question of price. “There’s always a cheaper place, no matter what you do,” he says. “So what we have to strive for is to be competitive on price, but unmatchable in quality.” Productions in Hungary this year include Brett Ratner’s feature “Hercules” for MGM-Paramount, and two TV series — NBCU’s “Dracula” and the pilot of HBO’s Cold War thriller “The Missionary,” in which Hungary doubles for East Berlin in the 1960s.

The Czech Republic struck back with the introduction of its own 20% film rebate in 2010, but it is held back by a cap on the total rebate amount, which is set at $25.3 million for this year. (Not to be outdone, Vajna says he’s pressing the government to increase the tax rebate in Hungary to 25%.)

“If (the rebate) became uncapped or it became sufficiently funded you would expect Prague to be at least as competitive if not more competitive than Budapest as a choice because of what the city itself offers,” says Matthew Stillman, managing director of Prague’s Stillking Films, which acts as the local partner to many Hollywood productions. Prague can double for many European cities, and also has first-rate studio facilities, like Barrandov, and post-production houses, such as UPP.

Stillking is now working on Joon-ho Bong’s post-apocalyptic tale “Snowpiercer.” The action is set on a train built on a rig in Barrandov. In June, Stillking moves onto Daniel Espinosa’s serial killer tale “Child 44,” set in 1950s Russia, for Scott Free. Czech Republic also hosts Tim Robbins’ spy romance “The City of Lies” later this year.

Production costs in nearby Romania and Bulgaria are far lower, which helps offset the lack of rebates there. Romanian studios MediaPro and Castel Film have hosted Hollywood productions like History Channel’s “Hatfields & McCoys” and Terry Gilliam’s “The Zero Theorem.” Bogdan Moncea, Castel’s marketing director, claims costs are as much as 35% lower than Czech Republic, and as much as 30% cheaper than Hungary. Romania may introduce incentives later this year.

Bulgaria’s plans for an incentive were vetoed by president Rosen Plevneliev in February. Bulgaria’s “Nu Boyana Film Studios,” which is owned by Avi Lerner’s Millennium Films, hosts Brad Anderson’s “Eliza Graves” and Renny Harlin’s “Hercules 3D” this year.

In the Balkans, Croatia introduced a 20% rebate last year, and has hosted location shoots in Dubrovnik for HBO series “Game of Thrones.” Serbia is set to join the contest this year with a 20% rebate. McG recently filmed scenes in Belgrade for Kevin Costner starrer “3 Days 2 Kill,” which is being produced by Luc Besson for EuropaCorp and Ryan Kavanaugh for Relativity Media.

In the Baltic states, Lithuania has just introduced a 20% tax break. Hollywood producer Rick McCallum of “Star Wars” fame was reported to be scouting for locations in the country in April. Neighboring Latvia plans to introduce a rebate worth up to 25% on local spend this year; the country’s Riga Film Fund already offers up to 20%.

Films and shows shooting in the region

Director: Joon-ho Bong
Studio: CJ Entertainment
Major talent: Chris Evans, Jamie Bell,
(1) Octavia Spencer, Tilda Swinton
Location: Prague

“Child 44”
Director: Daniel Espinosa
Studio: Scott Free
Major talent: Tom Hardy, Gary Oldman, Noomi Rapace, Joel Kinnaman
Location: Prague

Director: Brett Ratner
Studios: MGM-Paramount
Major talent: (2) Dwayne Johnson, Rufus Sewell, Ian McShane, Joseph Fiennes, Reece Ritchie
Location: Budapest

Director: Andy Goddard
Studio: NBC Universal
Major talent: Jonathan Rhys Meyers, Thomas Kretschmann, Oliver Jackson-
Cohen, Jessica DeGouw
Location: Budapest

“The Missionary”
Director:  Baltasar Kormakur
Studio: HBO
Major talent: Benjamin Walker,
Jesse Plemons, Gayle Rankin
Location: Budapest

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