Italian Film Incentives and Tax Credit Law

italian film incentives

Summary

In 2008 the Italian Parliament enacted a law providing for generous tax credits for investments in Italian film with the purpose to provide an incentive for the investment of resources in Italy. The support has been available since then for works of Italian nationality (involving minimum content shot or expenses incurred in Italy), those originally expressed in the Italian language, or those of cultural interest.

The law provides tax credits for producers, distributors, movie theater owners, and technical industries. The law also provides for the sheltering of profits, not only for film production and distribution companies, but also for companies not previously operating within the film sector.

On August 2014, the Italian Government confirmed relief available at 25% of qualified production expenditures, for international feature films, going from a CAP of 5 million Euros per project to a CAP of 10 million Euros per company. The new amount allocated for tax credit is up to 115 million Euros in total.

Resources

Filming in Italy: Successful Films in a Successful Incentive Framework

ANICA – The Italian Association of Film Industries

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Italian Tax Credit and Tax Shelter under Italian Law

MARIO LA TORRE (“La Sapienza” University of Rome) GIAN MARCO COMMITTERI (High School of Economics and Finance) (Tonucci & Partners – Rome) NEW YORK – OCTOBER 2009

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Italian Tax Credit FAQs

by Italian Film Commissions

Two measures may be of interest for foreign producers: the “Tax Credit” aimed at Italian executive producers for foreign films and the “Tax Credit” aimed at Italian Producers for national films or coproductions.  Tax measures are meant to optimise and support film production activities also through joint projects involving Italian and foreign production companies that choose to film all or a part of their projects in Italian territory.
The system for making the tools available to foreign producers who choose to film in our regions has recently been enhanced by the extension of tax credits to the entire audiovisual production chain, including – along with theatrical movies – products for television and web, whether they be dramas, animations or documentaries.

The benefits are grant to italian line producers who set up agreements with international companies intending to locate part of their foreign film-making on Italian soil. The upper limit for this type of support has been doubled from 5 to 10 million Euros, the rate is the 25 % of eligibile costs and the main condition are: italian expenses must not exceed the 60 % of budget and the expenses in other UE countries are eligibile up to 30% of the budget.

In practical terms, even if the Italian executive producer is the only one who can claim to the Ministry of Culture for the benefit, the foreign producer will transfer to the Italian company a sum equal to the total Italian cost less the fiscal benefit accrued. Under a financial perspective, the benefit works as a cash provision granted during the production: that is because the Italian line producer can offset the accrued tax credit against his tax debts on a monthly basis.

Does the tax incentive function as a credit or a rebate?
As a credit (regarding foreign films)

What qualifications are required to be eligible for the tax incentive? What are the qualifying expenditures?
All categories of film must pass a “cultural” test to meet the EU requirement for State aid.
The main conditions for foreign films are: italian expenses must not exceed 60% of budget. The eligible costs are: production costs up to the master copy (excluding any distribution cost)financial and insurance expenses: maximum 7,5% of the Production Cost; Production staff costs, net of social security contribution, not higher than 25% of total cost. Overhead expenses (staff and location not involved in the production) eligible in the percentage corresponding to the ratio between number of shooting days and annual days and, in any case, up to a maximum amount of 7,5% of the Production Costs.

Does the tax incentive just apply to below the line positions, or would it cover above the line as well?
Overhead expenses (staff and location not involved in the production) eligible in the percentage corresponding to the ratio between number of shooting days and annual days and, in any case, up to a  maximum amount of 7,5% of the Production Costs.

Is there an annual cap on the amount awarded under the incentive program? Is there a cap on the amount that can be awarded to a specific project, or a compensation cap of any sort?
The maximum cap for foreign film is 10 million of euros, no annual cap for foreign films.

Can you please let me know what other films have been shot in Italy and benefited from the tax incentive recently?
The face of an angel by M. Winterbottom, To Rome with love by W. Allen, Effie by R. Laxton, Aprés mai by Olivier Assayas,Nine by R. Marshall, Letters to Juliet by G. Winich.

What is the typical timeline once the credit is applied for?
60 days following the date of submission of the final application