FEATURE FOCUS
Hard times for soft money
Are Europe’s film tax credits under threat from the European Commission? Geoffrey Macnab reports on the truth about controversial new rules under discussion
I
t is just good housekeeping, says the European Commission (EC) of its ongoing consultation into how countries hand out soft money to fi lm-
makers. But there is unease in many European territories
about how new proposals could undermine their production support schemes. “The landscape of fi lm funding in Europe is being redrawn,” says Wolfgang Closs, executive director of the Strasbourg-based European Audiovisual Observatory (EOA), a public body that gathers information on the EU’s audio- visual industry. Eleven years have passed since the EC’s Cinema
Communication was published, a roadmap of sorts for national fi lm support schemes. Now is the time, the EC says, to revise the rules to ensure all Euro- pean Union member states “can compete and trade evenly”. The EC, the law-making body of the EU, seems
to have suggested countries that link the granting of subsidies with territorial spending conditions could fall foul of the European Court of Justice because they violate internal EU market principles
■ 46 Screen International at Cannes May 16, 2012
which restrict prioritising goods and services in one European market over another. This has perplexed many in the European fi lm
industry, who point out the entire European public film-funding system is based on the very idea of maintaining territorial spending conditions. “It is a complete game changer,” says a well-
‘Every European exchequer would say, ‘We’re not doing these tax
schemes’ Amanda Nevill, British Film Institute
placed UK executive of some of the ideas fl oated in March’s draft communication, which seem to sug- gest the creation of a single film market across Europe. “The EC is basically trying to take away the territorialisation aspect of the rules that exist. If their recommendations or approach were adopted, we would have to reapply to get our system approved and we wouldn’t based on the way it is currently structured.” Based on the EC’s initial call for responses to
the consultation last June, the draft communica- tion proposes three main changes to the 2001 document. They are: to extend the scope of activities covered
by the Communication to include all phases of an audiovisual work from concept to delivery to audi-
ences — the existing rules apply only to production support; second, to limit the spending obligation in the territory granting production support to a maxi- mum of 100% of the aid (not its entire budget); third, to require fi lm production support schemes that base the calculation of the aid amount on the production expenditure in a given territory, such as film tax incentives, to treat any production expenditure in the European Economic Area (EEA) as eligible.
‘Unintended consequences’ Unpick these proposals and some of the implica- tions do seem absurd. For example, a UK producer could spend money in the Czech Republic then come back to the UK and claim the tax credit there. “If it went down that way, it would be to the det-
riment of Europe as a film-making hub because every exchequer would say, ‘We’re not doing these tax [schemes],’” notes Amanda Nevill, director of the British Film Institute. “Obviously that’s not what Europe wants at this point in time when it needs every job possible. It’s the law of unintended consequences.”
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