Film Subsidies Safe as Europe Backs Co-Production Friendly Regulations

Universal Pictures
Ron Howard's racing drama "Rush" received Euro state subsidies as an official German-U.K. co-production.

New regulations will allow for more state funding of cross-border productions and increased support for distribution costs.

Producers across Europe are rejoicing following new regulations, published on Nov. 14 by the European Commission, that will allow for greater state subsidies for European co-productions, multimedia projects and film distribution across Europe.

The new Cinema Communication, which replaces rules set down in 2001, will allow producers of multi-territory co-productions to tap cross-border subsidies for up to 60 percent of the film's budget, up from 50 percent previously. State support for cinema distribution has also gotten the rubber stamp of approval from the Commission and co-productions can receive up to 60 percent of EU distribution costs from state coffers. So-called “difficult works,” including short films, documentaries and films from first- or second-time directors, will be excluded from these upper limits.

EXCLUSIVE PHOTOS: 'Rush's' Ron Howard, Chris Hemsworth and Daniel Bruhl

In another concession to co-producers and the realities of making cross-border productions, the Commission clarified the rules regarding support for postproduction, stating that, in principle, state aid “must not be reserved for specific parts of the production value chain” but that producers should be free to choose how and where they spend state film subsidies. This means a European country can't, for example, force a producer to do postproduction in their territory as a condition for receiving state subsidies.

The one glaring omission among the new regulations is subsidies for video games.

The Commission ruled that it had insufficient experience and data regarding European states' support of the local gaming industries to properly determine whether video games can be considered culture under EU law in the way that cinema is and thus allow similar forms of state subsidies for games.

STORY: European Commission Begins Final Consultation on Film Subsidies

“Although games represent a fast-growing sector, not all games necessarily qualify as audio-visual works or cultural products,” the Commission said. “It would therefore be premature to integrate this sector ... state aid measures supporting games will therefore continue to be assessed by the Commission on a case-by-case basis.”

The new regulations were welcomed by national film industries across Europe. The British government and the British Film Institute said in a joint statement that in the U.K. alone, the film sector provides some 117,000 jobs and contributes over $7.3 billion (£4.6 billion) to the national GDP annually.

"The U.K. film industry makes a valuable cultural contribution and is an important part of our diverse and dynamic economy," said George Osborne, Britain's Chancellor of the Exchequer. "Through the film tax relief we have been able to support this highly skilled, innovative and creative sector, and the European Commission’s Cinema Communication will mean we can continue to provide that support."

In total, European governments spend around $2.8 billion (€2.1 billion) a year in various forms of direct cash support for European productions and an additional $1.3 billion (€1 billion) in the form of targeted tax incentives.

Details of the new film regulations can be found on the European Commission website.