Lithuania, Macedonia to Launch Production Tax Incentives in 2014

Two of Europe's smallest countries will look to attract international producers, while Turkey will also offer new, though likely modest, incentives.

COTTBUS, Germany -- Two of Europe's smallest countries and one of the region's largest nations are set to launch new film production funds and incentives early next year.

Lithuania, with a population of 3 million, and former Yugoslav republic Macedonia, with 2 million inhabitants, are both introducing tax rebate systems expected to pump millions of dollars annually into movies shooting in their territories.

Turkey, a large film and TV market in the region, is also due to introduce funds to support international co-productions next year under a new film law, although details are not yet finalized. The money is not likely to be significant though.

Starting in January, the Lithuanian tax exemption system will be open to national and international projects that are spending at least 35, 000 euros ($45,000) in the Baltic EU member state, provided they have cleared "cultural test" criteria. The cultural test is an EU condition for such fiscal schemes that ensure films are shot in Europe or have relevant European content.

The scheme, for which the country has European Commission permission to distribute up to a total of $80 million in tax exemptions worth 20 percent of in-country spending by private investors that must be Lithuanian registered companies, will be administered by the recently established national film center.

Rolandas Kvietkauskas, center head, said ring-fenced funding of up to $65,000 annually for minority co-productions would follow mid-year or in 2015.

The center, which supports film production and development, has an annual budget of around $2 million, which was likely to be increased in 2014, he told an industry panel at the Connecting Cottbus (Co-Co) co-production market Thursday.

Lithuania produced eight state-supported feature films this year, of which five were co-productions with Finland, France, the U.K., Netherlands and Latvia.

In Macedonia, a Balkans country that is not an EU member, a newly established national film agency starts work in January, its head Darko Basheski told the meeting, held in the framework of the Cottbus Festival of Eastern European Film.

The agency will be funded by central government grants and a levy on broadcasters, exhibitors, cable operators, telecom companies and gambling services.

There should be around $5 million in government incentives in the form of 20 percent tax rebates on local spend and a similar amount from the levy, although he conceded that the industries expected to pay were still resisting the idea.

In Turkey, where state film support of around $10 million annually is distributed by the Ministry of Culture, modest new funds should be available to support co-productions under a new film law, Gulin Ustun of Istanbul's industry co-production initiative Meetings on the Bridge, said.

Turkey, a country with a population of 90 million, released 283 feature this year, including 66 local films -- of which 16 received state money, she said.

Turkish films account for 59 percent of box office receipts, she added.

The Film Festival Cottbus runs until Sunday. Co-Co runs through Friday.