Cannes 2012: Europe's Film Organizations Attack New EU Funding Rules

COLOGNE, Germany - The heads of Europe's public film funding bodies have attacked proposed changes to European law that would slash funding for Hollywood productions that shoot in Europe and could make cross-border European co-productions more difficult to piece together.

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The European Film Agency Directors (EFAD) whose higher profile members include the British Film Institute, France's Centre National de la Cinematographie and Germany's federal film funding body the FFA, issued a statement after its annual meeting in Cannes condemning the EU proposals as unclear and "hugely problematic."

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The changes to EU's Cinema Communications law would impact Europe's system of film subsidies that provide around €3 billion ($3.8 billion) per year for film financing and other support.

Among the most controversial proposals is a reduction in so-called "aid intensity" for non-EU productions that shoot in Europe. Under the rules being drafted, a $50 million European movie would get up to $25 million in subsidies but a $50 million Hollywood (or similarly non-European) film would only be eligible for up to $11 million. Currently, this differentiation does not exist.

The EFAD said penalizing non-European productions would have a negative impact on Europe as a production hub and "seriously threaten the international competitiveness" of the European film industry. Many European countries rely on big U.S. productions to provide local talent with top-level job experience, as well as income. In the U.K. last year, the film tax credit funneled more than $300 million to producers, the bulk of that going to Hollywood tentpoles that shot in Britain, such as Disney's John Carter.

Europe's film funding bodies also objected to a proposed change in funding law that would require producers to spend 100 percent of the aid they receive in the country that funds them. Currently, the rule is 80 percent, allowing producers to be more flexible in setting up multi-territory co-productions. The EFAD said the change would "reduce if not eliminate" the "multiplier" benefits which allow producers to boost their budgets by pooling subsidies from several EU countries.

The consolation on for the new Cinema Communication ends in June, after which a new law is expected to be adopted by the end of the year. The current legislation on EU film funding expires January 31, 2013.