When it comes to attracting foreign shoots in Spain, the motto could well be: “It’s the tax breaks, stupid.”
Of course, Spain has long been a foreign shoot locale: Think Samuel Bronston’s ’60s epics such as “El Cid.” International movies have always sought stunning locations, Mediterranean climate and low-cost labor. Since 2015, however, Spain has offered tax rebates for international shoots of up to 20%; 40% in the Canary Islands.
Tax credits are available to Spanish shoots and co-productions, reaching 25% in the Peninsula, 45% in the Canaries. Also, Navarre is dangling a 35% tax credit for local and international productions.
Three years after their launch, the rebates are having a huge impact on the sector: As a shooting locale, the country has never been more active in the past half century.
Benefits attract a wide range of projects. The biggest, among TV dramas, is “Game of Thrones,” which first lensed part of Season 5 as a test in 2014, returning for subsequent seasons, accessing tax rebates.
The show’s ninth season is spending less time in Spain than prior installments; however, the loyalty shown by the HBO flagship series has marked a before-and-after for the local industry.
Disney’s “Solo: A Star Wars Story” filmed last year in Canary Islands’ Fuerteventura; the second season of Sony-Crackle original “Snatch,” a TV spinoff from the Brad Pitt feature, rolls in January entirely in Málaga.
Over the next months, “Handmaid’s Tale’s” Reed Morano aims to shoot key scenes of Jude Law-starrer “The Rhythm Section” in Almería and Cádiz; Warner’s Patty Jenkins-directed “Wonder Woman 2” will film in Fuerteventura and Tenerife; and the upcoming “Terminator” reboot makes use of several Spanish locations, including Madrid.
“Undoubtedly [tax rebates] have had a positive impact in Spain,” says “Game of Thrones”’ Spanish line producer Peter Welter at Fresco Film. “All of us dedicated to film and TV services have been overworking for three years, with interesting and big projects.”
“There’s a constant flow of international shoots. It is increasingly difficult to find available experienced Spanish crew for foreign productions because of the amount of filming,” says Nostromo Pictures founder Adrián Guerra. He’s exec producer on Sam Worthington-starrer “The Titan,” Amazon Studios’ Dan Fogelman-directed “Life Itself” and Dan Krauss’ “The Kill Team,” all three partially filmed in Spain.
As the surge of international projects consolidates, the local services sector is developing industrial muscle. One example is the creation of Profilm España, an association recently formed by top eight servicing companies.
Profilm members forecast a minimum €150 million ($184.5 million) joint tax rebate for the foreign projects they are involved in this year. But figures could easily be much higher, they argue. “There is a lot of room for improvement,” Welter says.
Spain’s tax rebate — upped last year from 15% to 20% — is lower than those for Hungary (31%), France (30%), Malta (27%), Portugal (25%) and the U.K. (25%).
“Spain is already on the path of reasonable competitiveness with other countries, which it had lost for lacking tax rebates,” says Carlos Rosado, president of Spain Film Commission.
“Given cheaper price structure and lensing conditions — more hours of sunshine, a bigger capacity to diversify locations — a 20% tax rebate is profitable.”
The $3.7 million cap — $6.6 million in the Canaries — of the rebate sets it far from the $36.9 million ceiling of France’s TRIP system and the U.K. Tax Relief, where is unlimited.
“Hollywood projects spend according to the tax rebate; once they reach the €3 million cap, travel to another locale that offers more financing advantages,” Welter says.
But “the number of local producers dedicated to international shoots is growing, especially in the Canary Islands,” says Francisco Menéndez, a lawyer at Welaw.
Emma Roberts and Milla Jovovich’s feature “Paradise Hills,” by Basque director Alice Waddington, is readying to roll in the Canaries, backed by Macaronesia Films, a Gran Canaria-based joint-venture focused on logistics and production services, whose partners include Guerra’s Nostromo.
The tax rebate is drawing the attention of more high-profile producers.
“We feel that the tax rebate application is going a little blindly; we need to work together along with the Tax Agency and the Icaa film institute to improve it,” says Pilar Benito, managing director at Morena Films, the company behind “Comandante,” “Che” and “Cell 211.”
Morena teamed with France’s Memento and Italy’s Lucky Red and RAI Cinema on “Everybody Knows,” Asghar Farhadi’s Cannes opener, which filmed over August-November in Madrid and Guadalajara, having access to tax credits system for local productions, channeled through Agrupaciones de Interés Económico (AIEs), a tax vehicle available since 2008.
Seasoned in tax-break film financing, Morena has provided production services on international shoots such as Canadian adventure miniseries “The Queen of Swords” in 2000 and Roland Joffe’s “There Be Dragons” (2011).
The company is now “analyzing advantages and obstacles of tax rebates, studying two projects, a TV drama and a big-budget feature film,” Benito says.
Cannes’ closing film, Terry Gilliam’s “The Man Who Killed Don Quixote,” produced by Tornasol Films, is also accessing Spanish tax credits. The film lensed last year in Castille La Mancha, Navarre and Fuerteventura, serviced by Macaronesia.
“With current tax incentives, it’s undoubtedly more advantageous to offer production services to international projects than co-produce them,” Guerra says.