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Film industry finally gets some relief

Government and sector pact to raise investor tax breaks from 18 to 25 percent

Relief in sight: Manuel Gómez Pereira (r) directs his forthcoming movie La ignorancia de la sangre in Seville.
Relief in sight: Manuel Gómez Pereira (r) directs his forthcoming movie La ignorancia de la sangre in Seville. EFE

Six months overdue, the Film Commission — which was set up in September 2012 with much fanfare by Education, Culture and Sports Minister José Ignacio Wert to study a new model for the movie industry — has reached an agreement on government subsidies and tax incentives for the sector.

According to the new deal, the rate of tax relief for film investment is to be increased by seven percentage points, going up from 18 percent to 25 percent. A legal body will also be set up to make it easier for those outside the industry to invest in movie production.

The commission has similarly approved an important change regarding the way subsidies are paid out. According to the Culture Ministry, the two government systems that support cinema — a more selective one that rewards the artistic quality of projects and an automatic one, which is based on objective criteria — are to be handed out in advance and not redeemed afterwards, as has been the case until now. This means producers will know beforehand how much public money they will be able to receive and thus be able to avoid uncertainties. All these agreements will now be submitted to the government, which will decide when they will be applied.

The commission itself — the contributions of two other working groups involved are still forthcoming — also approved the reduction of the VAT rate on film, which is the highest among Spain’s European neighbors at 21 percent, although it did not give a specific figure.

The agreement was approved on Tuesday by representatives from all sectors of the industry, as well as from the different ministries involved in film, such as finance, industry and the Prime Minister’s Office.

For decades, an increase in tax incentives has been one of the main hopes of film producers, who see more government support of investment as non-negotiable for the creation of a strong and long-lasting film industry. At Tuesday’s meeting producers had asked for the tax relief figure to be raised to 30 percent — in France the rate is 36 percent, while in Germany it is 40 percent — though the Culture Ministry statement talks of a figure of “at least 25 percent.”

The new president of the FAPAE association of film producers, Ramón Colom, said his organization valued the deal, but pointed out that the agreed rate was not 25 percent, but “between 25 and 30 percent.” “It is a success to have reached these conclusions with the consensus of all the subsectors involved,” he said. “Now it is up to the administration to implement them so that the regulatory framework is in force in 2015.”

The president of the Spanish Film Academy, Enrique González Macho, was keen to play down the euphoria with which the ministry announced the agreement. A lot of work still remains to create a new film industry model, he said.