Spain Powers Up International Shoot Tax Breaks

Wrath of the Titans
Courtesy of Canary Islands Film

MADRID — Six days before producers will be allowed to restart production shoots in Spain, Pedro Sánchez’s PSOE socialist government has powered up the tax breaks cap for Hollywood and other foreign shoots as part of a relief package for Spain’s cultural industries.

Plowed through a Spanish-tax-paying service company working on a foreign nationality shoot, the cap for the total tax rebate on one shoot, previously set at €3 million ($3.3 million), has now been raised, crucially, to €10 million ($10.9 million).

The rebate rate has also edged up five percentage points from 25% to 30% for the first €1 million of local spend by a foreign shoot, and 25% (from a prior 20%) thereafter.

Spain is already building as an international production hub in terms of both the reach of Spanish shoots and titles, especially drama series, shot there. “Money Heist” (“La Casa de Papel”) rates as the most-watched non-English language series on Netflix, for example, which, in a pioneering experiment, shot all episodes of crime series “Criminal” at its European Production Hub just north of Madrid, despite the fact three quarters of the series’ episodes featured British, German and French stars acting in their native languages.

The new measures, and especially to muscular rise in the rebate ceiling, drew strong applause from Spain’s international shoot industry.

The rebate spike “will allow a large part of a movie and several episodes of  foreign series to shoot in our country,” said Spanish trade body Profilm, representing Spanish international shoot sector enterprises.

“This is a win for both Spain and the U.S.,and other international players. Given the production logjam that existed in Hollywood before COVID-19, this will be welcome news as the sector looks to reopen,” said former HBO executive James Costos, appointed last month as the L.A-/Madrid-based president of Secuoya Studios, the production arm of the Sequoya Group which is currently constructing soundstages at Madrid Content City, a 140,000 square-meter production-education-leisure complex.

“We will continue pressing [the government] to make more improvements. But this really is a renaissance moment for Spain and they are finally seeing it and taking action,” Costos added.

The new measure comes after Costos, a former U.S. ambassador to Spain under Barack Obama, and Spain Film Commission president Carlos Rosado addressed a letter to Spanish prime minister Pedro Sánchez arguing in favor of raised tax breaks for international shoots and after lobbying by other trade bodies such as Profilm.

“With this reform, Spain is positioned as a highly competitive and profitable filming destination for the international industry and, among them, the North American one,” Rosado said, greeting the tax rebate refund hike.

“This is fantastic news, and couldn’t come at a better time,” Secuoya Group president Raul Berdones told Variety, pointing out that the measures were especially appropriate for drama series, allowing a $40 million budget production to deduct all its local spend in Spain.

The shot in the arm for Spain’s international shoot industry is backed not just by the government but also the main Popular Party opposition, which governs in the region of Madrid.

The main question is when international shoots will be able to travel to Spain allowing the country to benefit from the new measures.

The tax rebate hike forms part of a wide-ranging culture industry relief package approved Tuesday May 5 by Sánchez’s government with tax credits also raised for Spanish nationality shoots, and a waiver of the usual requirement for Spanish movies to bow in theaters in order to qualify for Spanish state incentives, though tis measure is just in place through Aug. 31. The government will also pay €13.2 million ($14.4 million) to Spain’s exhibition sector in compensation for theater closures.