State aid: Commission authorises €104 million Italian film production tax incentives
The European Commission has approved under EC Treaty state aid rules a €104 million Italian tax incentive scheme for film production until 31 December 2010. The Commission found that the scheme was compatible with the cultural derogation of the EC Treaty, in line with the Cinema Communication rules concerning aid to film production (see IP/01/1326 ).
Competition Commissioner Neelie Kroes commented: “The good cooperation from the Italian authorities enabled the Commission to assess the compatibility of the scheme quickly. I welcome the use of the cultural criteria made by the Italian authorities to increase the variety of films available to European citizens.”
The main objective of the Italian film support scheme is to maintain and enhance the cultural potential of the film sector. In Italy, the fragmentation of the film sector and the strong presence of the US majors in distribution and production have combined to create a strong presence of mainly US commercial films with high budgets. Up to now, the Italian film sector has focused increasingly on films with limited audience appeal, leading to a near dominant position for a few major commercial films.
The scheme introduces tax credits to support the production of European cultural films and films of special cultural interest, as well as a tax shelter for European cultural films. The tax credit and tax shelter are available to companies which are taxable in Italy and the tax credit is available against all types of taxes.
The Commission’s assessment of the tax credit and tax shelter for film production was based on the State aid rules in the 2001 Cinema Communication ( see IP/01/1326 ), applying the derogation in Article 87.3(d) of the EC Treaty, allowing aid for cultural activities under certain conditions.
In line with the Cinema Communication the support is targeted towards cultural products, where the maximum aid intensities are limited to 50%, with the exception of low budget and “difficult” films, where it could amount to 80%. The applicable territorial conditions are below the maximum territorial requirement allowed in the Cinema Communication.
The Italian authorities also committed to implement any changes that may be required by changes to the state aid criteria in the Cinema Communication before the end of the scheme.