Film co-productions are all about the money

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When representatives from more than 30 countries around the globe gather to hawk their wares at the Association of Film Commissioners International's Locations Trade Show 2008, kicking off today at the Santa Monica Civic Auditorium, they won't simply be handing out glossy brochures with photos of glamorous locales and sprawling studio complexes.

That majestic mountain range with 360-degree views might be breathtaking, and the soundstages state-of-the-art, but the movie won't be shot there if the region they're repping doesn't offer a generous tax credit.

"The halcyon days when you could simply assume that your native attractions were enough to bring productions to your jurisdiction are past, and one of the reasons for that is the intense competition worldwide," says Robin James, AFCI board president and CEO of the Pacific Film and Television Commission in Brisbane, Australia. "We're all in the business of looking for opportunities these days."

And an increasingly popular way of maximizing those opportunities is by taking advantage of an international co-production agreement like the one signed by Singapore and Australia in September 2007.

"What it basically means is that an official co-production between Australia and Singapore -- once it's approved -- will allow each country's producers to access any benefits and assistance in their own country, which includes financing or tax incentives," explains Carlene Tan, manager of Media Development Authority of Singapore, which provides funding for approved films. "Furthermore, these productions will be considered local content. And that's important because in Singapore and Australia, television stations have to show a certain amount of local content."

Unfortunately, working under an international co-production agreement not only maximizes potential sources of soft money for filmmakers, it also compounds the number of obstacles they face. Instead of being bound by one set of complicated rules and regulations regarding the filling of various key crew positions and in-country spend, the production is bound by two. Something as small as the price of a plane ticket to fly in a crew member can throw the spend "offsides" and make the film ineligible for a country's tax credit.

"There are times when simply drawing up a project based on the various soft-money programs is a bad idea," says Stephen Onda, a producer based in Saskatchewan, Canada, whose credits include the upcoming thriller "Surveillance," starring Julia Ormond and Bill

Pullman. "People are looking to us now and saying, 'If we came and did the whole thing in Canada, what would happen?' Well, we would kiss away the U.K.'s subsidies, but we'd be able to maximize the Canadian subsidies, which are often mathematically greater than when we try to do the mix-and-match."

Pleasing one set of requirements can be difficult enough, according to producer Guy J. Louthan, who has worked on six films shot in Romania that had designs to take advantage of the U.K. tax incentives, including 2004's "Seed of Chucky." Often, it can lead to major creative compromises.

"You've got to bring in all these people. And you just cannot have anybody else other than an English DP, and there may not be a really good English DP available, but you've got to have one," Louthan says.



But the tight restrictions are often counterbalanced by outlandish loopholes. For instance, the bulk of a film can shoot anywhere in the world and still qualify for U.K. tax credits, as long as it passes a British "cultural test." It's a situation Louthan simultaneously satirized and took advantage of with his upcoming feature directorial debut, "Made in Romania" -- about a naive producer who finds he can get financing for his dream project if he shoots it in Romania, thus taking advantage of a complicated, and ultimately crooked, tax credit scheme. Because the film within the film is a Victorian costume drama, Louthan's project is eligible to qualify as British.

Ironically, although Louthan bent over backward to make sure "Made in Romania" was eligible for the U.K. tax credits, he's not so sure he'll go to the trouble of recouping them.

"Just the audit alone is tens of thousands of dollars," Louthan says. "The budget for my film is slightly less than $1 million. Twenty% is basically all you can really expect to get back -- and that's 20% of your U.K. spend." He says Focus Features (the parent company of "Seed of Chucky" distributor Rogue

Pictures) also decided not to bother recouping on that film. "It wasn't enough money for them, really."

But others are determined to play the system for all it's worth, down to the end of the line.



"Depending on the essential elements of each project, we kind of decide -- on short notice, actually -- where we're going to take it," says Ingo Vollkammer, co-CEO of Leomax Entertainment, producer of the upcoming French-Canadian co-pro "Walled In" (to be distributed by Anchor Bay), starring Mischa Barton.

At the moment, Vollkammer and his Leomax co-CEO Scott Einbinder are trying to decide whether their film "The White Isle" will shoot in Spain, where it's set, or South Africa.

"Because the rand is at its lowest point in the past three years compared to the euro, the price-benefit ratio would be much higher in South Africa," Vollkammer says. "And we've established an entity in Germany that we can use as an official co-producer, and structure it as a German/South African co-production."

Leomax has also opened a division in Paris, and it's planning to open another in Spain, all to better take advantage of the countries' respective treaties.

"You can't just pick a country and say, 'I'm going to make my next 10 movies up in Saskatchewan or Australia,'" Vollkammer says. "You have to follow the trend and see how things change on a monthly basis and think, 'Where can I get the most out of it?'"   
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