ITALY: FUND FOR CINEMA AND AUDIOVISUAL INDUSTRY INCREASES TO €640 MILLION

Despite the difficulties of the current times, the Italian film and audiovisual industry is showing great resilience and, given the high demand for audiovisual products for streaming channels, many national and international productions have been made in Italy. Thanks to the strict protocols and the economic measures put in place to revive the sector, amounting to about 300 million euros to date to support the whole sector. The Financial Law increased the ordinary Fund for cinema and audiovisuals from the basic 400 million to 640 million Euros for the year 2021.

Tax credits are the most robust instrument, whose original endowment in favor of film and audiovisual productions, including video games is equal to 313 million (to which further resources deriving from residues of the previous year will be added).

Decree no. 70 of February 4th  2021 by the Ministry of Culture, in agreement with the Ministry of Economy, has introduced important news on tax benefits to support production. The measure makes permanent the increase in tax rates provided for temporarily during the emergency period: it increases from 30% to 40% for cinematographic works, while for audiovisual works a simplification is envisaged with a base rate of 30%, which can be increased to 40% in well-defined cases (the previous regime provided for four different rates).

Another element concerns the maximum annual credit limits; while previously they were fixed per company, now they refer to the work and are equal to 9 million Euros (without distinction between types of works), which can be raised to 18 million Euros in case of resources coming from countries outside Italy for at least 30% of the total cost.

An ad hoc tax credit is also introduced for research and training works, including feature-length documentaries costing less than 1.5 million euro and shorts costing less than 200,000 euro. Music videos are also eligible for tax incentives.

The new decree also envisages the discontinuation of the procedure for using the credit over several years, which allowed resources to be reserved in advance, thus reducing the allocation available for works produced in subsequent years. It will thus be possible to apply for tax credit until the amount available for the current year is exhausted. The cost eligible for the tax credit includes post-production expenses incurred in Italy.

An absolute novelty is the adjustment in the commitment of resources to cover the expenses to comply with the anti-Covid-19 health protocols, for which a 100% tax credit is envisaged, up to 400 000 Euros per work. In the event of an irreversible interruption of the work due solely to the epidemiological emergency, the tax credit will also be granted on the basis of eligible costs incurred and paid up to the time of the interruption.

Finally, with another decree, the Ministry has reformed the tax credit rules concerning the attraction of investments in the film and audiovisual sector in Italy (“Foreign or international tax credit“, to which about 50 million Euros are allocated in 2021): also in this case, the maximum percentage of assignable tax credit is increased from 30% to 40%, and the obligation to have carried out at least one day of filming in Italy, or of processing in the case of animation works, in order to be eligible for the credit. Decisive steps to strengthen the competitiveness of our audiovisual system in view of the post-pandemic period.