Producing in CEE A guide to film, television and interactive digital media incentive programs - Dentons
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Producing in CEE A guide to film, television and interactive digital media incentive programs
Contents
4 ... Why produce in CEE?
11 ... Government film incentives
12 ... Czech Republic
22 ... Hungary
32 ... Poland
46 ... Romania
52 ... Slovak Republic
58 ... About us
59 ... Contacts
60 ... Our media and film industry experience
2 • Producing in CEE Producing in CEE • 3Why produce
in CEE?
Europe is the homeland of cinema, with the Lumière by increasing the cash rebate and other financial
brothers being pioneers in the art of moving incentives for television and movie productions
pictures. The new invention spread swiftly across filmed in their countries in a bid to attract regional
the continent, with the first cinemas appearing in and international film crews. Government-based
Central and Eastern Europe (CEE) at the end of the production grant systems in these countries are
19th century. Central Europeans became quickly eligible for both local and international producers,
fascinated with the new invention. Harry and Albert provided that they work with local partners – acting
Warner, born in today’s Poland, first discovered the both as majority and minority co-producers or under
Lumière brothers’ invention before sailing off to a works-for-hire system1. The systems are operated
America to set up Warner Bros. studio. by public institutions such as the Hungarian Film
Institute and Film Office, the Polish Film Institute,
Though often overlooked, CEE has a rich history
the Slovak Audiovisual Fund and the Czech Film
of film making, and it continues to produce award-
Fund. Production grants and financial incentives are
winning films, which are enjoyed by growing
separate schemes. For example, in Poland and in
audiences. The works of Andrzej Wajda, Ján Kadár,
Hungary, producers can take advantage of both
Roman Polanski, Pawel Pawlikowski and Milos Forman
types of support for one project.
have been screened in cinemas around the globe.
Stable financial support systems boost production in
CEE has also become a popular film production
CEE. In 2019, 62 feature films were produced in the
destination thanks to its experienced film crews, a
Czech Republic, 44 in Slovakia, 45 in Poland, 29 in
variety of diverse filming locations in close proximity
Romania and 20 in Hungary2. As a filming destination,
to each other, and much lower production costs
Hungary is the standout in the region when it
when compared to the US or Western European
comes to the works-for-hire system for international
countries.
productions. As reported by the country’s National
Many big-budget productions such as Spider-Man: Film Fund3, records were broken in film production
Far From Home (2019), Mission: Impossible – Ghost in Hungary in 2019, with the amount directly spent
Protocol (2011), Robin Hood (2018), Terminator: Dark on film production reaching US$565.6 million
Fate (2019) were shot in CEE. During the last decade, (HUF 164.4 billion), which represents an increase
Hungary became the second most popular European of approximately 50% over the preceding year;
filming destination after the United Kingdom. 94% of the entire amount came from
international productions.
Producing in CEE — our comprehensive legal
guide to CEE film, television and interactive digital
media incentive programs — provides an overview
of the available financial incentives for audiovisual
production in the Czech Republic, Hungary, Poland,
Romania and Slovakia and the criteria that must be
1 It means that the end product, i.e. the movie, will not be a majority
satisfied to qualify for them. or minority co-production (meaning the rights are split between the
co-producers); instead the studio will obtain all rights and the actual
After introducing attractive financial incentives producers will just provide production services, i.e. works for hire.
2 www.cineuropa.org, www.filmneweurope.com, www.filmcenter.cz,
schemes, CEE countries continue to adjust the
National Film Office
requirements to demands and make them more 3 https://nfi.hu/en/news/film-and-tv-production-resume-in-hungary-
competitive. In CEE countries, governments compete record-breaking-spend-in-2019
4 • Producing in CEEBox office collections Local box office collections have been growing Feature film premiered in 2019: national vs international2
in CEE year on year, apart from 2020 due to the
The CEE region has historically had a strong pandemic. For example, in 2019, Poland had 60.9
domestic film consumption and the local film million admissions compared to 59.7 in 2018, 56.6 Total 341
production industry has been heavily reliant on box in 2017, 52.1 in 2016, 44.7 in 2015, and it landed 17th
office collections. spot in the list of TOP 20 International Box Office 290 Total 288
Markets prepared by the Motion Picture Association
of America1. Other countries that have a smaller
Total 248
population than Poland have also recorded growth 226
in recent years.
Total 206
204
177
Czech
20192 Hungary Poland Romania Slovakia
Republic
Population 10.7 9.7 38.3 19.3 5.4
(in million)
Total n/a 62 (22%)
Admissions 18.3 15.1 60.9 13.1 6.5 44 (18%) 51 (15%)
29 (14%) 24
(in million)
Slovakia Romania Hungary Poland Czech Republic
Local film 62 24 51 29 44
premieres
International
1 http://filmcommissionpoland.pl/assets/Zalaczniki/PG_2020_5_web.
pdf
2 Czech Republic: https://www.filmcenter.cz/files/editor/files/ National
Facts%20and%20figures%202019_WEB.pdf; http://www.
filmneweurope.com/countries/czech-profile; Hungary: http://
abouthungary.hu/news-in-brief/hungarys-film-industry-
attracted-a-record-breaking-huf-1644-billion-spend-last-year/;
National Film Office; Poland: http://www.filmneweurope.com/
countries/poland-profile; Romania: https://cineuropa.org/en/
cfocusprofile/1965/83327/; Slovakia: https://cineuropa.org/en/
cfocusprofile/1663/62876/
6 • Producing in CEE Producing in CEE • 7Obviously, due to the COVID-19 pandemic restrictions, Gross 2018 box office collections (US$ million)2 Funding options
there has been a significant change in the film
industry’s production model: more producers are now Slovakia 39 Each country has different requirements or audiovisual work or a minimum spend in the country
looking for video-on-demand (VOD) platforms as their application forms and may support several stages where the application of support is being submitted.
distribution partners. That shift will not be enough to Romania 66.8 of production, provided that a local partner is The limits of support apply and vary depending on
cover losses resulting from a drastic decrease in film involved in the process. In most countries a so-called the country. For example, Poland has caps per project
consumption in cinemas. For example, according to Hungary 78.3 cultural test – verifying the connection between the and applicants, while in the Czech Republic eligible
forecasts, Slovakia’s audiovisual industry (which is the production and country providing financial support – expenditures are capped at 80% of the total budget.
smallest market out of the countries covered in this Czech Republic 101 applies. Other requirements include the length of the
guide) could experience a nearly €60 million decline
in 2020, including an estimated drop of €43 million in Poland 312.3
Rebates1
production and over €15 million in film distribution1.
This decrease in film consumption in cinemas has Czech
Hungary Poland Romania Slovakia
pushed governments to increase public funding to Republic
support local cinematography and this spending
puts pressure on the governments to find appropriate Maximum 20% of eligible 30% 30% 35% 33% (since
financial models. amount of costs. In addition, The rebate Additionally, productions 2020)
support 66% rebate on can reach explicitly promoting
withholding tax 37.5% through Romania, with a
paid in the Czech the addition minimum local spend of
Republic by of qualifying 20% of the total budget
international cast non-Hungarian of the production, can
and crew. costs. also apply for a rebate
of 10%.
Planned €29m €90m €47.1m €250m (RON1.2bn) until -
annual (CZK800m) (HUF33bn) (PLN216m) end of 2023
budget
Cap per Eligible costs - €3.3m - -
project cannot exceed (PLN15m)
80% of the total
project costs.
1 https://nfi.hu/en/news/film-and-tv-production-resume-in-hungary-
record-breaking-spend-in-2019,
Global Incentives Index 2020 (https://www.o-spi.co.uk/wp-content/
1 https://kafkadesk.org/2020/05/07/slovak-film-industry-facing-multi- uploads/2020/06/Olsberg-SPI-Global-Incentives-Index-
million-economic-fallout-due-to-pandemic/ June-2020.pdf?fbclid=IwAR3msFTmaxpy9sYA9YCW-), http://www.
2 World Film Market Trends - European Audiovisual Observatory filmneweurope.com/news/romania-news/item/120456-romania-
Source: https://rm.coe.int/focus-2019/1680994a74 resumes-cash-rebate-scheme
8 • Producing in CEE Producing in CEE • 9Government
film incentives
Financial incentives are not the only source of the Working in the New Dynamic
financial support for foreign crews in the CEE region.
Each country has a well-established system of During the pandemic, the landscape of television
production grants eligible for majority and minority and film production in CEE and the rest of the world
co-productions, with an obligatory local partner is changing as the industry tries to adapt to the new
on board. dynamic. In this framework, both the government
and private sector players (i.e. associations, digital
For example, in Poland the maximum subsidy for a platforms, unions etc.) are making an effort to support
contemporary full-length feature film is set at no more the continuation of production with adequate health
than 50% of the total budget and at PLN 4 million and safety measures. Since the situation is changing
(ca. €940,000) or PLN 6 million (ca. €1,408,000) and evolving on an almost daily basis, we recommend
for historic films. There are different numbers for reviewing the rules applicable to the jurisdiction you
films with limited commercial value, directed by new will be producing in.
or unknown directors or low budget. In Slovakia,
as of October 2020, 50% of the estimated total Please visit Dentons’ COVID-19 (Coronavirus) hub
budget funding from third-party financial resources for more information and legal resources relating to
(either through direct funding or through the sale COVID-19: https://www.dentons.com/en/issues-and-
of preferential rights) must be provided and feature opportunities/covid-19-coronavirus-hub
or animated projects can apply for up to 12.5% of
To find out more about CEE film, television and
the production budget (with a limit of €500,000).
interactive digital media incentive programs, or
Creative documentaries can apply for support up
structuring productions, please contact one of
to 20% of the production budget (with a limit of
the lawyers listed at the end of this document.
€300,000)1.
In addition, each country has regional grants available
for supporting cinematography in this particular part
of the country.
On top of this, each of the countries of the CEE region
is eligible to apply for the grants from European
bodies, including Creative Europe and Eurimage.
1 http://www.cedslovakia.eu/clanky/podpora-uvadzania-
europskych-audiovizualnych-diel-v-televiznych-programoch
10 • Producing in CEECzech Republic
The Czech Republic has always been a film country and Czech film support schemes
is considered by producers from across the world as one
of the most interesting and amazing filming destinations. In the Czech Republic, there are currently two official
Over the past 20 years, many foreign film studios as nationwide schemes supporting cinematography.
well as independent production companies have had
In 2019, the Czech Film Fund
Firstly, activities related to Czech cinematography
the opportunity to appreciate stunning locations, highly paid a total of CZK 1.2 billion
are supported by the so-called support for
professional film crews and quality post-production
cinematography (in Czech podpora kinematografie), (US$52.4 million / €48.3
services, which put the Czech Republic among the
world’s most attractive filming locations.
which may be, however, partially drawn also by million) in incentives
foreign co-producers under the conditions described
The first peak of the Czech film production came below. During 2020, more than CZK 370 million have to 71 projects.3
between 1996 and 2006, when blockbusters like been allocated under this support.
Mission: Impossible (1996), The Bourne Identity (2002),
Secondly, from 2010 the Czech Republic also
Blade II (2002), Hart’s War (2002), The League of
offers an incentives scheme for film and television Both of the abovementioned schemes and subsidies
Extraordinary Gentlemen (2003), Hellboy (2004) and
production irrespective of whether it comes from provided on their basis by the Czech Film Fund (in
Casino Royale (2006) were produced. The second peak
the Czech Republic or abroad (in Czech: filmové Czech: Státní fond kinematografie; the “Fund”) are
of the production was connected to the introduction
pobídky), which aims to further support the film governed by the Audiovisual Act and the Statute
of a proper film incentives scheme in 2010. This new
industry and increase the competitiveness of Czech of the Fund (the “Statute”).1 Provision of subsidies
stimulus set the stage for another wave of production
cinematography. Since the introduction of the must also respect the requirements of European
represented by shoots such as Mission: Impossible
scheme, more than 185 film and TV projects have legislation.2
– Ghost Protocol (2011), A Royal Affair (2012), Child
been supported and approximately CZK 2.5 billion
44 (2015), Spider-Man: Far From Home (2019), Oscar-
winning masterpiece Jojo Rabbit (2019) and TV series
(approx. €90 million) has been paid out in support
for domestic and foreign projects. Even though at
Borgia, Crossing Lines and Carnival Row.
the end of 2019 the Czech Film Fund suspended
Nearly 80 films and series were shot in the Czech new applications to the incentives scheme, referring
Republic in 2019, bringing €363 million to the to a lack of financial resources, it seems that the
Czech economy.1 incentives scheme is up and running again and
registering new applications in 2020.
Nearly 80 films
and series were
shot in the Czech
Republic in 2019,
bringing €363
million to the 1 Act No. 496/2012 Coll., on Audiovisual Works and Promotion of
Cinematography and on Amendments to Certain Acts (Audiovisual
Czech economy. 2
Act) and Statute of the Czech Film Fund dated 3 May 2017.
Commission Regulation (EU) No 651/2014 of 17 June 2014 declaring
certain categories of aid compatible with the internal market in
application of Articles 107 and 108 of the Treaty (GBER).
3 https://www.filmneweurope.com/press-releases/item/119565-film-
incentives-in-the-czech-republic-in-2019-attracted-almost-czk-9-
billion-usd-393-million-eur-363-million-in-expenditures-interest-in-
1 Film New Europe, 20 February 2020, accessible from here filming-continues-to-rise
Producing in CEE • 13Top co-production partners
of the Czech film industry:
Support for cinematography Slovakia, Poland, Slovenia, Value of the support
The purpose of the support for cinematography is to Romania, Lithuania, Hungary, The maximum amount of the support for
cinematography depends upon the type of the
support Czech cinematographic projects. Germany, Switzerland, the project (cinematographic work). It ranges from CZK
The condition for drawing this kind of subsidy is Netherlands and Russia.1 5 million for the distribution of a cinematographic
meeting the requirement that at least 10% of the work, to CZK 40 million in the case of producing
overall costs of the project are borne by a Czech Czech Cinematographic Work. Other notable
producer. A full range of cinematographic activities, Support for cinematography may be granted for capped amounts are: (i) CZK 5 million for promotion
ranging from drafting of the first version of a script, all several explicitly stated purposes and activities of Czech Cinematographic Work, (ii) CZK 8 million
the way to distribution, financing cinema digitization, in the motion picture industry, in particular for: for organizing a film festival or exhibition on
support for education or organizing a film festival, is (i) development, producing or promoting Czech cinematography, and (iii) CZK 10 million for projects
supported under this program. Cinematographic Work, (ii) distribution of any focused on technical innovation and modernization
cinematographic work, (iii) organizing a film festival of cinematography.
Additionally, since the support does not exclude or exhibition, or (iv) technical innovation and
projects made in cooperation with foreign modernization of cinematography. The support is Procedure
co-producers, the funds may be drawn also for provided either as a grant or as a profit-sharing
projects produced by multiple (even foreign) The support for cinematography is provided based
grant establishing the right of the Fund to receive a
co-producers, under the condition that one of the on an individual application following a call for
certain share of the profits gained from the supported
co-producers is based in the Czech Republic and the applications announced by the Fund. The calls are
cinematographic work in the future.
cinematographic project complies with the rules of announced for each type of project separately
international conventions on co-producing, such as The beneficiary from the support for cinematography and always specify the conditions of the support,
the European Convention on Cinematographic must meet the following eligibility criteria: (i) having including the project type and its focus, the deadline
Co-Production (both types of projects outlined a clean criminal record; (ii) not being in liquidation for applications and their mandatory contents and
above will be hereafter referred to as or bankruptcy proceedings; and (iii) having no debts attachments, the sum of allocated financial support,
“Czech Cinematographic Work”). whatsoever towards the Tax Office, Customs Office, and other potential conditions and circumstances
on social security payments and contributions to of the support. Calls are announced at least four
public health insurance. All the criteria must be met times a year.
both in the Czech Republic and potentially abroad.
Applications are submitted online via the Fund’s
website and website app. Submission of the
application is connected with payment of an
administrative fee of CZK 5,000 or CZK 10,000
depending on the type of the project.
Each application is assessed and decided on by the
Fund’s committee based on an expert opinion.
The committee must decide on the application
within 90 days from the deadline for applications
as declared in the respective call. No remedies or
appeals are admitted against the decision.
Providing the support for cinematography is
1 http://www.filmneweurope.com/countries/czech-profile completely in the Fund’s discretion. Support must
be used solely in relation to the funded project.
14 • Producing in CEEIncentive scheme Some costs are explicitly excluded. These costs Content restrictions Minimum eligible costs
include, for example: interest on loans and The project needs to pass the cultural test (i.e. test As the rebates are calculated on the basis of the
The second type of state support is the incentives borrowings; bank charges; value added tax; the for European cultural and production criteria) by eligible costs of the project, there is a prescribed
scheme, which applies both to films intended for purchase price of real estate; operating expenses not scoring a minimum of 4 points from cultural criteria, minimum amount of the eligible costs related
distribution in cinemas as well as certain types of associated solely with the incentivized project; costs and receive a minimum of 23 points overall, out of a to the project necessary for falling within the
television productions, regardless of whether they related to the use of own producing capacity of the possible total of 46 points. incentive scheme.
are Czech or foreign projects, including all post- applicant; in-kind performance provided by a co-
production work. The incentives scheme offers producer free of any charge etc. The test examines whether the project meets The minimum eligible costs (excl. VAT) must be at
filmmakers cash rebates on qualifying Czech and particular European cultural (e.g. story is based on least: (i) CZK 15 million in case of feature, animation
international spend. Eligibility events that are part of European culture; work has and TV films, (ii) CZK 2 million in case of documentary
cultural importance; reflects European values etc.) films, (iii) CZK 8 million in case of fictional TV series
Those rebates are provided from the so-called eligible In order to qualify for the incentives scheme, the
and production criteria (e.g. final version is in any and (iv) CZK 1 million in case of animated TV series
costs, which are capped at 80% of the total project following conditions must be satisfied:
language of the EEA; shooting, production or post- (both per episode).
budget. Eligible costs are divided into two categories: Production in the Czech Republic production takes place in the Czech Republic etc.)
The maximum amount of eligible costs from which
• Czech eligible costs – Payments for goods and The project must be produced at least partially
The cultural test forms part of the initial application for the rebates are calculated cannot exceed 80% of
services provided by companies or individuals with in the Czech Republic, which means that at least
the registration of the project (see below)1 and results the total budget of the project. Otherwise, the
their registered seat, residency or place of business part of the preparatory works, filming (or animations)
are reviewed and inspected by the Fund during the rebates are calculated only with respect to such
in the Czech Republic, and tax registered in the or finalization of the work must take place in the
application procedure. 80% of the total budget.
Czech Republic. Czech Republic.
In this regard, the support cannot be granted with Other criteria
• Foreign eligible costs – International costs paid Limits for length
respect to projects with violent, pornographic or The applicant for the subsidies: (i) must have a clean
to foreign cast and crew who pay withholding tax The project must meet the minimum length
dishonest content. criminal record; (ii) must have no debts whatsoever
in the Czech Republic. requirements set as follows: (i) 70 minutes in case
towards the Tax Office, Customs Office, on social
of feature, animation, TV or documentary films,
In order for the costs to be eligible, they must be security payments and contributions to the public
(ii) 30 minutes in case of fictional TV series, and
incurred after the date of the submission of the health insurance; (iii) cannot be in liquidation or
(iii) five minutes in case of animated TV series
application for registration but before the date of bankruptcy proceedings; and (iv) shall not be affected
(both per episode).
submission of the application for payment of the by enforcement of a court decision.
incentive (see below). Furthermore, eligible costs
must be paid from a separate project account
(except for cash payments), which shall be used 1 Form for the test is available together with the application for the
registration of the project from the Fund’s websites and is submitted
solely for the financing of the project.
together with the application.Value of incentives First is the registration proceedings, started Applications may be submitted anytime (within the Co-productions and Eurimages
by an application for registration of the project. three-year deadline), however at least 10 shooting
The incentive scheme offers a refund of a certain Applying for the registration can be done throughout days in the Czech Republic must be completed (the The Czech Republic is a signatory to the European
percentage of both Czech and foreign eligible the whole year (i.e. is not limited or connected to deadline for a Eurimage project is nine months) within Convention on Cinematographic Co-production.
costs directly related to the realization of the particular calls). four months from the submission of the application Within the framework of the Council of Europe,
project (rebates). The support is paid directly to the for listing. funding for the production of films is also encouraged
applicant after the production work on the project are The applicant for the registration must be tax resident by the Convention on Cinematographic Co-
completed (rebates). in the Czech Republic or in any other member state of Together with the application for listing of the project, production, which has been in force since 1994 and
the European Union or the European Economic Area. the project’s budget must be filed as well as the has been ratified by 43 signatories. Co-production
Czech eligible costs In addition, the applicant must have a permanent shooting schedule.
As regards the Czech eligible costs, rebates may be enables projects of foreign co-producers to be
establishment in the Czech Republic and be the eligible for the support for the cinematography
granted up to 20% of all such costs. Based on the application and provided information,
producer or co-producer of the audiovisual work in as described above.
the Fund decides on listing of the project and
Foreign eligible costs question or must be producing the work based on an
allocates estimated funds (rebates) to the project. The Czech Republic is also a party to Eurimages,
As regards the foreign eligible costs, rebates may be order of the producer.
granted up to 66% of the amount of withholding tax Finally, after the decision on listing, the applicant which is the cultural support fund of the Council
Applicants submit their applications for project of Europe. It has a total annual budget of €26 million.
paid in the Czech Republic. may submit the application for payment of the
registration along with the cultural test, a synopsis Eurimages promotes independent filmmaking by
incentive and initiate the proceedings on payment
Limitation of overall subsidy and a Czech version of the script. providing financial support to feature-length films,
of the incentive.
The aggregate amount of the subsidy cannot The date of the submission of the application is animation and documentary films. In doing so, it
exceed 50% of the overall budget of the project. Applications can be submitted anytime within four encourages co-operation between professionals
crucial, as it determines the day after which the costs
However, there is no cap on the pecuniary amount years after the delivery of the decision on registration established in different countries. It has four
incurred qualify as eligible for the support.
of the support. of the project to the applicant. A maximum of two support schemes:
Submission of the application is connected with a applications for payment of the incentive is allowed.
Maintaining evidence of the expenditures payment of an administrative fee of CZK 30,000. • Cinema co-productions – Eurimages financially
The applicant must be prepared to prove the eligible Applicants must submit a statement of account, supports European co-productions in the
costs with respect to which the rebates are drawn If the application for registration meets all prescribed financing plan, audited statements demonstrating form of full-length feature films, animations or
either (i) by the particular schedule to the application requirements and the project is eligible for support, the eligible costs incurred, co-production or service documentaries of a minimum length of 70 minutes.
for the incentive; (ii) by its accounting records; or (iii) the Fund issues a decision on registration of the agreements, and other financial information together
• Theatrical distribution – Eurimages contributes
upon a request of the Fund by the statement of a project within 30 days. The decision lays down with the application for payment.
to the marketing and publicity costs of films and
bank account established for the project in question conditions and requirements for production of the
Incentives (rebates) are transferred to the applicant supports certain measures for fostering awareness
or by contractual documentation. project, including the number of shooting days etc.
within 30 days from the issuance date of the decision of European cinema.
Procedure The applicant which received the decision on on payment of the incentive. • Exhibition – Eurimages supports the programming
registration of the project is entitled to continue to and promotion of European films in general and
The procedure for granting the support under All of the abovementioned applications shall be
the second part of the procedure, which is listing especially in theaters in those of its member states
the incentives scheme is divided into three submitted to the Fund by electronic means via the
proceedings. Applicants must submit the application that have no access to the media program of the
separate parts. Fund’s website application.1
for listing of the project within three years from European Union.
receiving the decision on registration. The purpose
of the listing proceedings is allocation of the rebates • Digital equipment for cinema theaters –
(support) to the particular projects. Eurimages finances the purchase and
installation of digital projectors, servers
and other related equipment.
1 The website for application (only in Czech) is accessible from here
and all forms are available from here.
18 • Producing in CEE Producing in CEE • 19Prague Film Fund Applications for a project which (i) is pornographic Beside the employment relationship, youth and producers may also apply for incentives (rebates)
in nature, (ii) condones violence and openly offends children may also participate in artistic parts of the and register or list their projects. There should be
Beside the nationwide support schemes operated human dignity or (iii) breaches the legal regulations film production as independent contractors. Although no specific COVID-19 pause in the evaluation and
and administrated by the Fund, many municipalities valid in the Czech Republic shall be excluded from this alternative has no minimum age limit (i.e. even assessment processes of the Fund or any other Fund-
and other institutions have established support funds grant proceedings. actors younger than 15 years are permitted), with administrated proceedings.
and incentive schemes on their own. As the most regard to limited legal capacity of underage children
prominent filming location in the country, Prague is When evaluating an application, the Fund takes In this regard, the Fund moreover plans to motivate
it is necessary to obtain consent of their parents for
one on them. into account, in particular, the benefits for the future applicants and help them acquire subsidies by
their involvement in the project. In addition, consent
presentation of Prague abroad in terms of the topic adapting the general conditions of support schemes
of the Labor Office is required for participation of
Prague is the traditional center of the Czech film and role of Prague in the audiovisual project. The to reflect the current extraordinary situation and
children under 15 years of age.
industry and a favourite destination for international following criteria are essential: (i) the importance troubles related to film shooting and producing.
productions. The Prague Film Fund is intended to of Prague and the way of depicting the city in the Finally, youngsters may cooperate on the project Furthermore, the Fund offers individual consultations
actively support the positive presentation of the work, (ii) the number of shooting days at locations in also as independent entrepreneurs. This would apply and settlements to those current applicants who are
Czech capital abroad, through film and television Prague and (iii) the value of the motifs/specific sites mostly in cases where youngsters perform other negatively affected by the COVID-19 outbreak and/
productions. (in terms of tourism, culture, history, architecture). Of production activities than acting, i.e. working on or related measures and therefore cannot fulfil their
importance is also the scale of distribution outside of the animation or providing other forms of supplies obligations and commitments (for example a number
Prague Film Fund provides grants to feature films
the Czech Republic and the marketing potential of the or services. Underage entrepreneurs must have of performed shooting days) laid down by respective
for international distribution in cinemas as well as
project in terms of the tourism industry. their parent‘s consent, with their business activities decisions on registration or listing of the project.
for TV films and series to be broadcast on foreign
approved by a court.
television stations. The essential condition is that In 2019, the Prague Film Fund allocated support in the In addition, on May 13, 2020, the Fund allocated
the project portrays Prague as Prague and not as a
stand-in for another city. The fund generally aims
overall amount of CZK 12 million.
COVID-19 context the extraordinary amount of CZK 92,000,000 to
support Czech cinematography during the COVID-19
at supporting a positive presentation of the city of Labor issues – young crew Similarly to many other areas of business activities, pandemic. These resources were allocated within
Prague abroad via film and television, attracting film three extraordinary calls of the Fund directed to
and television projects with marketing potential for
member the film industry is also affected by the current
support reopening of cinemas, production of
COVID-19 pandemic. Both Czech as well as foreign
the promotion of Prague, and profiling the city as a During film production, it is evident that in many productions decided to postpone or even completely audiovisual works and distribution of movies.
film-friendly destination which is aware of the benefits cases some positions (mostly acting roles) would terminate their planned or started projects or movie
of audiovisual production. Finally, on October 15, 2020, the Ministry of Culture
need to be held by youngsters, including children premiers. It is estimated that the Czech film industry
announced that it intends to propose to the Czech
under 15 or 16 years of age. could suffer a decrease of up to 75% in the volume of
Grants are awarded solely on the basis of selection government a specific financial COVID-19-related
film production in 2020 in comparison with 2019.
from applications submitted to the grant proceedings In case such a young crew member should be a support of CZK 100 million to be distributed within the
that are regularly announced by the administrative producer’s employee, then he/she must be at least 15 On the other hand, even in these times the Fund is audiovisual industry by means of the Fund. The exact
board of the Fund and commenced by publication of years old and must have completed primary school. still functioning normally and both support schemes terms of the proposal are not publicly available yet.
a call for submission of applications. Proceedings are Employees younger than 18 years are furthermore under its administration are running. The Fund has
governed by the statute of the Prague Film Fund. prohibited from working at night (between 10 pm and confirmed that all currently awarded supports and
6 am), unless they are at least 16 years old, night work incentives will still be paid without any restrictions.
immediately follows their usual working hours and will According to the Fund, calls for the cinematography
not last for more than one hour. scheme are going to be announced as usual and
20 • Producing in CEE Producing in CEE • 21Hungary
Hungary ranks as Europe’s second most popular The Hungarian film Value of incentives
filming destination after the United Kingdom.1 Recent
shoots include Robin Hood starring Jamie Foxx, Will support scheme Since June 2018, the tax allowance is 30% of the
Smith’s thriller Gemini Man and the latest Terminator direct production cost. The basis for calculating the
The support scheme of the motion picture industry
movie, starring Arnold Schwarzenegger. In 2019, the indirect support for cinematographic works is 100%
is regulated by the Hungarian Motion Picture Act1
Hungarian film industry broke records with an increase of the direct film production cost if at least 80% of
which was designed to make the Hungarian film
of 50% – the amount registered as direct spend on the film’s direct production costs qualify as direct
industry internationally competitive and to preserve
film production grew to $565.6 million. Hungary’s film Hungarian film production cost. For cinematographic
the country’s strong position in the European
industry has highly experienced and educated film works not reaching this ratio, the basis for indirect
film industry. It consists of (i) support offered by
crews, a variety of exciting and diverse filming locations support is the direct Hungarian film production cost
Hungarian corporate taxpayers that is set out in
in close proximity to each other, and the employment multiplied by 1.25.
the Hungarian Corporate Tax Act 2, and support
and production costs are much lower than for example
provided via the Hungarian tax authority (“indirect The amount of support under the Hungarian
in the USA. But there is at least one more decisive factor
support”); and (ii) budget support granted from the Motion Picture Act may range up to 50% of the
that has attracted Hollywood filmmakers’ attention:
central budget and support granted by municipal film’s production budget for any cinematographic
the Hungarian film support scheme. The aim of this
governments and national minority self-governments work, and 50% of the Hungarian contribution
chapter is to describe these incentives in detail.
from their own budget, as well as the training for international co-production films. In case of
contribution to the motion picture industry3 an international co-production film, besides the
(“direct support”). Hungarian film producer, if at least one film
producer from a member state of the European
Support may be granted for several purposes and
Economic Area (“EEA Member State”) participates,
activities of the motion picture industry: (i) film plan
the amount of support under may be up to
development; (ii) preparation of film production; (iii)
60% of the Hungarian contribution.
film production; (iv) film distribution and marketing
activities designed to facilitate film distribution and The amount of support for a Hungarian film produced
film sales; (v) film copy renovation and archiving; (vi) for presentation in cinema in the genres of (i) feature
research and training in the motion picture industry; film; (ii) full-length feature documentary; (iii) popular
(vii) organization of events for the motion picture science and (iv) animation, may be up to 100% of
industry, and participation in events and film festivals; the film’s production budget, and of the Hungarian
(viii) preparation and dissemination of publications contribution for international co-production films, if
for the motion picture industry; (ix) infrastructure
Hungary ranks as developments.
the film’s production budget does not exceed HUF
237 million for a Hungarian film and HUF 467 million
Europe’s second Hungarian Forints for an international co-production
most popular filming film. This limit is determined every year by the
Hungarian Budget Act4.
destination after the UK.
1 Act II of 2004 on Motion Pictures The amount of support for a Hungarian film may be
2 Act LXXXI of 1996 on Corporate Tax and Dividend Tax
3 Any film producer or film production company receiving indirect up to 100% of the film’s production budget, and
support under the Hungarian Motion Picture Act is obliged to pay of the Hungarian contribution for international co-
0.5% of the direct film production cost as set out in the decision
made by the Film Office on eligibility, not exceeding HUF 15 million
per film as a motion picture training contribution to the Hungarian
National Film Institute Public-Benefit Non-Profit Private Limited
1 According to Variety online: https://variety.com/2018/ film/news/ Company, by way of the means specified in the Hungarian Motion 4 Currently Act LXXI of 2019 on the Central Budget of Hungary
hungary-production-incentive-1202876509/ Picture Act. for the year 2020.
22 • Producing in CEE Producing in CEE • 23production films, if the film is originally produced in Support may only be granted in connection with Procedure (i) a production and budget plan at an appropriate
the Hungarian language, and it is likely that the film’s cinematographic works that meet the cultural level of completion, which is required for starting
production budget will not be recovered through requirements as follows: for film production, a Indirect support: Indirect support is granted the production; (ii) sufficient funds covering the
all revenues coming from all forms of distribution. cinematographic work is considered to comply based on the direct cost of production of the film’s production budget, calculated excluding the
If the film’s production budget is recovered during with cultural requirements if it scores at least 16 out cinematographic work and with the direct Hungarian amount of support applied for; and (iii) the consent
distribution, any amount exceeding the production of 32 points based on the cultural criteria set out in film production cost, as certified by the Film Office from holders of copyrights and related rights for film
budget must be repaid to the sponsor. the Hungarian Motion Picture Act, and (i) qualifies upon request of the applicant. First, the Film Office adaptation and for the distribution of the film, and/or
as a European co-production film provided that it is verifies the eligibility of the project for support and the contracts on these subjects. Direct support may
The amount of support for a Hungarian film may be produced with Hungarian participation, or (ii) fulfils determines the amount that the project is entitled to be allocated for the production of an international co-
up to 100% of the film’s production budget, and at least two of the specified cultural criteria. according to its budget and the sources of funding. production film only if the Hungarian film producer
of the Hungarian contribution for international co- Then, once the film production is completed, the has title of ownership to the first original negative
production films, if an international co-production At least 60% of direct support provided for film Film Office determines the actual amount of support or an original copy suitable for reproduction of the
film is produced, in addition to the Hungarian film production purposes must be used for covering that can be received by the production base on the cinematographic works and/or is entitled to make a
producer, with the participation of at least one film the direct Hungarian costs of film production. The actual spend. copy thereof that is suitable for presentation.
producer from a country listed by the Development sponsor may prescribe a higher ratio, however, it
Assistance Committee of the Organization for may not exceed 80% of the support provided. If the Direct support: Direct support may only be Upon the film producer’s request, the Film Office
Economic Cooperation and Development. script of the cinematographic works makes shooting awarded to Hungarian films and films with Hungarian classifies films for establishing eligibility for support
on original sites necessary, the sponsor may give participation and is provided on the basis of a in the following categories: (i) Hungarian film; (ii)
The amount of support for a Hungarian film in the consent for using up to 60% of the support provided tender or an individual application. It depends on film with Hungarian participation; (iii) other film with
genres of (i) documentary; (ii) animation; (iii) scientific for non-direct Hungarian costs of film production. the characteristics of the cinematographic work, in Hungarian participation; or (iv) other film. Direct
documentary; (iv) experimental film or (v) short film particular its script, budget, artistic value, the identity support grants are conditional upon the classification
may be up to 100% of the film’s production budget, The Film Office, which is a separate organizational of the authors, producers, and actors of the film, or of film according to the Hungarian participation ratios.
and of the Hungarian contribution for international unit of the Cabinet Office of the Prime Minister the nature of any other purpose or objective worthy
co-production films, if the resources required to (“Film Office”), establishes eligibility for support of support. Direct support may be awarded either in Common rules of direct and indirect support:
produce the film contributing to cultural diversity upon request of the film producer or film production the form of repayable support or non-repayable Only persons and entities registered by the motion
cannot be provided otherwise. This rule is not company, or the distributor. The following documents support. In case of repayable support, the sponsors picture authority1, being the Film Office, are eligible
applicable to feature films produced to be presented need to be enclosed with the application: (i) the determine the method and amount of repayment. to receive direct and indirect support. In practice,
in cinema. complete script of the film in Hungarian or a copy this means that a local project company needs
of the film suitable for viewing; (ii) the statements Direct support may be granted only after a contract is to be established in Hungary with respect to the
Eligibility requirements from the film producer or film production company concluded between the beneficiary and the sponsor. contemplated film project.
or film distributor on compliance with the cultural If the supported objective is not achieved due to a
No support may be granted to activities aimed at requirements; and (iii) proof of the payment of breach of contract by the beneficiary, the beneficiary
the production, distribution, and archiving of films administration fees. must repay the support to the sponsor. Direct support
that may seriously impair the physical, mental or may not be awarded to an officer of the sponsor
moral development of minors, particularly those that vested with responsibility to decide on the award
involve pornography or extreme violence. Moreover, of support, and to his/her close relatives and to any 1 Any Hungarian citizen and persons holding the right to free
movement and residence, legal entities established in the territory
no support may be granted to certain television applicant entity where the above person holds an of Hungary or in any EEA Member State may apply for registration
programs that, based on their genre, do no not executive office with authorization to sign for that if they intend to apply for support. The registration procedure
qualify as cinematographic works of cultural value entity, or holds a share embodying majority control.
for motion picture organizations and natural persons is initiated
exclusively upon request. Granting support is conditional upon
(e.g. reality shows, scripted reality). registration. Registration is not a condition for granting support in
Direct support may be disbursed for the purposes of the case of economic operators and institutions that perform film
film productions where the sponsor established that distribution activities only for the purposes of their education, library,
or public collection tasks, except for public collections explicitly
the film producer applying for support possesses: related to the motion picture industry.
24 • Producing in CEE Producing in CEE • 25No support may be awarded: Public broadcaster’s media funds The NFI determines the rules applicable to tenders Eligibility requirements
and subsidy awards in its statutes and/or its
• if the beneficiary is not registered, or has been The Media Service Support and Asset Support Policy. Eligibility requirements are specified in the Standard
deregistered by the motion picture authority; Management Fund (“Fund”) (in Hungarian: Tender Conditions.
Médiaszolgáltatás-támogató és Vagyonkezelő Alap) Media Council: Support for public service programs
• if the beneficiary has any overdue tax, contribution
or other public dues owed to the state; is responsible for the production and support not qualifying as cinematographic works, and for
Procedure
of public service programs not qualifying as community media service shall be provided by the
• if the beneficiary failed to comply with its obligation Media Council through public tender procedures. Support for public service programs not qualifying
cinematographic works.
to provide a mandatory copy for archiving under In order to ensure transparency, non-discrimination as cinematographic works and for community media
the relevant legislation; Linear audiovisual media service providers with and guaranteed predictability, the Media Council services is provided for by way of public tender
significant powers of influence are obliged to shall define the Standard Tender Conditions for the procedures. In the course of the tender procedure,
• if the beneficiary failed to give account of the use
allocate 2.5% of their annual advertising revenues tender procedures, laying down the rules for the fundamental principles must apply, such as equal
of support granted by the sponsor, his statement of
to supporting new Hungarian cinematographic management and evaluation of tenders. opportunity, objectivity, transparency, equal treatment
account has not been accepted by the sponsor, or
works. This obligation may be satisfied either by and the principles of non-discriminatory procedures.
has overdue unpaid liabilities to the sponsors;
paying the relevant amount to the Fund in cash, or Value of incentives The Sponsorship Fund and the Television Film
• to an entity that has any executive officer or by allocating funds to a new cinematographic work College may not unjustifiably differentiate between
owner who has been the executive officer of any to be designated in an agreement by and between The Sponsorship Fund grants a financial, non- the beneficiaries. Support may only be granted
entity during the three years preceding the date the Fund and the media service provider. The media repayable, direct support. When establishing the after a grant agreement is concluded between
of submission of the application for support that service provider may deduct any amount thus paid amount of support, the Sponsorship Fund takes into the Sponsorship Fund and the beneficiary.
failed to give account of the use of a support up or contributed from its corporate tax base. consideration the normal market conditions of the
granted by the sponsor, whose statement of motion picture industry, in the course of which it
account has not been accepted by the sponsor; National Film Institute Public-Benefit Nonprofit examines and compares the cost items
Private Limited Company (“NFI”): As of 1 January of a cinematographic work. The maximum amount
• to any entity the owners of which include an entity 2020, the NFI is responsible for allocating the of support in a tender procedure is HUF 300 million
that failed to give account of the use of direct resources earmarked to motion picture industry in the case of cinematographic works and HUF 100
support granted by the sponsor used during three objectives. The revenue of the NFI comprises the million per episode in the case of film series.
years preceding the submission of the application central budget subsidy and other revenues generated The Television Film College may increase the
for support, or whose statement of account has during its operation. The tasks of the NFI shall, in maximum amount of support in specific cases –
not been accepted by the sponsor; particular, cover the following: i.e. if the cinematographic work is of significant
• to a beneficiary undergoing bankruptcy, liquidation importance from a nation strategy point of view
• operation of the support scheme for the motion
or dissolution proceedings; and the increase is clearly justified.
picture industry through the allocation of subsidies;
• to a beneficiary who fails to comply with the
• development of principles for applications;
requirements of orderly labor relations (including
equal treatment, notification of employees to the • continuous monitoring and control of the
tax authority, work permits, employment of completion of cinematographic works and the
minors, etc.); achievement of other supported objectives, as
well as the use of subsidies, and promoting the
• to a legal entity established in an EEA Member
international distribution of cinematographic works
State without an establishment in Hungary by the
and their enrolment to film festivals, starting from
disbursement date of any support at the latest.
the award of the subsidy.
26 • Producing in CEE Producing in CEE • 27Co-productions Hungary is also a party to Eurimages. Eurimages
is the cultural support fund of the Council of
Hungary is a signatory to the European Convention Europe. Established in 1989, it numbers 38 of
on Cinematographic Co-production. Within the the 47 member states of the Strasbourg-based
framework of the Council of Europe, the securing organization, plus Canada as associate member. It
of funding for the production of films is furthermore has a total annual budget of €26 million. Eurimages
encouraged by the Convention on Cinematographic promotes independent filmmaking by providing
Co-production. It is in force since 1994 and ratified financial support to feature-length films, animation
by 43 signatories. Further, Hungary has also signed and documentary films. In doing so, it encourages
bilateral treaties (e.g. with Canada) on beneficial co-operation between professionals established in
treatment of co-productions involving the different countries. It has four support schemes:
signatory countries.
• Cinema co-productions: Eurimages financially
For the purposes of the film support scheme, a co- supports European co-productions in the
production film means a cinematographic work jointly form of full-length feature films, animations or
produced by a Hungarian film producer where the documentaries of a minimum length of 70 minutes.
rights and obligations of each film producer are set
• Theatrical distribution: Eurimages contributes to
out in a co-production agreement. An international
the marketing and publicity costs of films and
co-production film means any cinematographic work
supports certain measures for fostering
produced by film producers established in different
awareness of European cinema.
states, which is classified as such by a bilateral or
multilateral international agreement or the laws of the • Exhibition: Eurimages supports the programming
states concerned. Other international co-production and promotion of European films in general and
film means any cinematographic work produced especially in theatres in those of its member states,
by film producers established in different states not which have no access to the media programme of
subject to any bilateral or multilateral international the European Union.
agreement, where the rights and obligations of
• Digital equipment for cinema theatres: Eurimages
each film producer are set out in a co-production
finances the purchase and installation of digital
agreement and in Hungary the film benefits from
projectors, servers and other related equipment.
indirect support only. The value of incentives for co-
production films is specified above under the direct
support of government film incentives.
Producing in CEE • 29Employment issues – Personal income tax
young employees related issues
Employment of a children under the age of The Hungarian National Tax and Customs
16 years of age in a film production is subject to Administration (in Hungarian: “Nemzeti Adó-és
prior notification to the guardian authority. Vámhivatal”, hereinafter: “NAV”) is the authority
responsible for the enforcement and collection
If shooting the film is not possible to be scheduled
of income taxes levied under the Personal
for another time due to objective reasons, a young
Income Tax Act.
employee may be ordered to work at night at the
set as per the following: (i) night work for a young In general, according to the Personal Income Tax Act,
employee under the age of 16 may be ordered until any and all income of a private individual is subject
23:00 hours at the latest, and only if night work to taxation. This means that the Hungarian-sourced
is performed in not more than two days inside a income of foreign performers can be subject to
period of seven consecutive days, and the guardian taxation. It is worth mentioning that in order to
authority is of the opinion that such night work is avoid double taxation, Hungary has concluded tax
presumed to pose no risk to the young employee’s conventions with over 80 countries, including USA,
health and development; (ii) night work for a young Canada, Australia and EU member states.
employee over the age of 16 may be ordered until
24:00 hours at the latest, and only if night work is Non-resident performers may choose a simplified
performed in not more than three days inside a taxation method to avoid administrative burdens.
period of seven consecutive days. In this case, they are subject to 15% income tax on
their revenue (here, revenue excludes the value
The daily rest period allocated to employees received in the from of accommodation and travel).
after night work must be at least 16 hours. Young The precondition for choosing the simplified taxation
employees must be supervised at all times during method is for the non-resident performer to have a
their employment for the purpose of compliance temporary residence in Hungary (meaning that the
with occupational safety and health requirements. performer enters Hungary for an intended stay of no
more than 183 days within any 12- month period). In
A young employee receiving full-time school
case of cinematographic works, if the time period
education may perform night work only on days
required for production (including preparations)
preceding rest days, public holidays when there is no
exceeds 183 days, the stay is considered to be
school, on working days preceding days when thereis
temporary nonetheless. The above rule also applies
no school, and/or during school holidays.
to non-resident private individuals who are not
performers (i.e. such as other crew members,
composers etc).
Non-resident performers may be exempted from and
will not be subject to Hungarian taxes if the amount
of the revenue acquired in any twelve-month period
does not exceed HUF 200,000.
Conclusion
The Hungarian motion picture support scheme
aimed to position the Hungarian film industry to
the centre of the of the internation film productions.
Naturally, however, this support scheme for the
film industry is not in place purely for Hollywood
filmmakers. Films such as the Oscar-winner Son of
Saul and Oscar nominee On Body and Soul are both
indicative of Hungary’s prospering local film industry.
30 • Producing in CEE Producing in CEE • 31You can also read
