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Eastern Europe Spotlight

By Vladimir Kozlov

Eastern and Central European nations continue to add new studio facilities, constructed to lure filmmakers from across the globe -- but whether the filmmakers choose to use them depends largely on tax incentives.

Hungary's Korda Studios, which hosted Universal's "Hellboy II" production and recently launched its 23,700-square-foot Stage 5, has more plans for new facilities. "We plan to open the world's largest soundstage in January 2009," says Korda Studios CEO Laszlo Krisan.

"Hungary introduced a simple and transparent tax incentive mechanism in 2003 to stimulate local film production activities," says Erzsebet Toth, film commissioner with the Hungarian Film Commission. Last June, Hungary renewed its film production incentive, which can amount up to a 25% cash rebate on Hungarian spend.

While production facilities in Hungary continue to expand, development is slower in the Czech Republic, where the last major investment was Barrandov Studios' $9 million "Max" soundstage in Prague two years ago. "They won't build anything (new) until there are incentives," says Ludmila Claussova, head of the Czech Film Commission.

Earlier this year, the Czech Republic's finance ministry rejected a proposal to create a tax rebate for filmmaking. The local film commission is optimistic the initiative will eventually be approved.

Meanwhile, Russia, which has also been trying to establish itself as an international film production region, is yet to introduce incentives. "Conditions for tax incentives in Russia are becoming ripe only now, while before that, the domestic film business was in development stages," says Yuri Sapronov, director general of Russian World Studios.

He adds that an instrument that could soon emerge in the Russian market is the completion bond. "The initiative to introduce a completion bond into the market is coming from private-capital companies, and authorities are showing interest in the instrument," Sapronov says.

However, in spite of the absence of incentives, Russian World Studios is preparing for the official launch of a $100 million studio complex in St. Petersburg. "We are already shooting TV series in St. Petersburg," Sapronov says. "And we hope to begin working at full capacity this fall. Within the next three years, we plan to invest $150 million more in the studio's second and third construction stages."