Less funds for foreign movies shot in Europe

Cannes 20 May 2012 - by Domenico La Porta

The European Union is considering a legislative proposal to reduce subsidies to non-European film productions that shoot on location in Europe. For this reason, there are worries within the co-production market. At the moment, the subsidies amount to € 3 billion annually.

The news was reported during the yearly event organized by the EuropeanAudiovisual Observatory al Cannes Festival.  The proposed law distinguishes between productions requesting subsidies on the basis of whether they are European or not. At the moment there is no such distinction, allowing non-European productions to receive the same subsidies as European productions if they shoot in Europe or have a co-production agreement with a European country.

The European Commission aims to prevent the system from being abused. The current system created strong competition between European countries which use public money to attract large, mainly American, production companies. An example is Great Britain which, thanks to its tax credit system, obtained over € 250 million in European subsidies for big Hollywood productions in 2011. The European Commission is afraid that these subsidies will damage and slow down small European productions.

The development of technical equipment and European know-how as consequence of this new system, which often requires a high level of specialization, should also be taken into account. New professions have been created, new investments have been made, and all this has affected European competitiveness and impacted the world audiovisual industry. If the new law is adopted, these industries would probably move outside the European Union. This would weaken the position of the EU, but not the number of films being produced elsewhere, which has no benefit at all for the European film industry.

The legislative proposal not only aims to reduce subsidies, but also introduce a rule to spend 100% of the subsidies (as opposed to 80% today) within the respective European country.  This is another source of concern for the professionals because they are aware that such reforms would kill the co-productions that do have multi-territorial ties regardless of whether they are totally European.