EU and the film industry

Emil Wojtaluk

Did you know that within the European Union we have some rules concerning financial support for movies? On 14th of November 2013 the European Commission has adopted modified criteria for access to support programs in favor of films and other audio visual works, under EU State aid rules of Member States. Countries of the Union provide about 3€ billion every year in cinematic support. 2 billion in grants and soft loans and 1 billion in tax incentives. Estimated 80% of this goes for film production. Countries that contribute the most to helping this form of art are UK, France, Germany, Italy and Spain. Member States has 2 years to comply with new regulations. The main aim of proposed rules is the development of the European film industry with emphasize on cultural diversity on our continent.

klapsThe new rules are gathered in Cinema Communication Paper. The changes allow for wider scope of activities. Now it’s up to Member States to define what cultural activities are worthy of granting aid, as the paper underlines. It gives more opportunities to promote cinematic heritage and it would be possible to give more aid to cross-border productions. Before the adoption of Cinema Communication Paper consultations with the participation of stakeholders and Members States has been held.

The new support rules amended previous rules from 2001. What remains and what has changed?

  • Applicability for all phases of an audiovisual work from concept to delivery to audiences(previously only for film production)

  • Limitation of aid up to 50% of the production budget (distribution and promotion costs remains steady at the same level)

  • Co-productions founded by more than one Member State can get aid of up to 60% of the production budget (increase in this area)

  • What is interesting there are no limits on aid for script writing, project development or for difficult audio-visual works (e.g. short movies, documentary works) defined by all Member States

What can be limited?

Every Member State will still be able to impose territorial spending conditions on beneficiaries. For example that 60% of the aid amount must be spent in their territory. There would be a question, if it’s not against Single Market rules? – the answer is NO. Putting such restrictions is fully justified by the promotion of cultural diversity which is connected with the preservation of resources and knowledge of the industry at national or local level. No matter what amount of aid will be granted, Member State may use additional conditions. Because of that, beneficiaries would be obliged to carry out production activity at minimal level at the territory of particular Member State to receive founding – such requirement can’t exceed 50% of the production budget. Scope of territorial spending conditions cannot reach above 80% of the production budget.

What about games?

There is a problem of defining common assessment and exemption criteria for this type of aid. The Commission emphasize that even though games represent a fast-growing sector, not all games qualify as audio-visual works or so called cultural products. The process of production, distribution, marketing and consumption of games differs from that of films. It would be too fast to include this sector in the Communication Paper according to the EC. It will be continued to assess State Aid Instruments implementation in games sector but every case will be considered individually on a case-by-case basis.

Opinion of the industry

New rules are hailed as “victory for European Cinema” especially by British Film Industry and French Filmmakers, praising decision of European Commission as “preserving the complex but efficient fabric of European cinematic support”. It is a significant improvement for the industry knowing that average of 1300 films is being produced every year in Europe. Commission gives equal chances for countries with less popular languages respecting subsidiarity principle in cultural areas – now they have more to say on maximum level of support they can give for their producers. More aid will encourage the European filmmakers to create new audiovisual works with preservation of cultural diversity in the EU at the same time.

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