New tax laws boost film in Bulgaria


COTTBUS, Germany -- Changes to Bulgaria's tax and economic incentives system promise to give filmmaking in the Balkans country a boost in the new year, participants at industry event Connecting Cottbus were told Thursday.

A reduction in the tax that businesses pay on their profits and new rules allowing value-added tax rates of 20% to be fully reclaimed beginning this January should provide a major leg up to filmmaking, Gergana Dakovska of Bulgaria's National Film Center said.

A new system of co-production credits that allows producers to claim up to 10% of the total budget of a co-production and 80% of the local producer share also is stoking production.

The system applies only to countries that are signed up to the European Convention on Cinematographic Co-Production and a few other countries, such as Canada, but not yet the U.S., Dakovska said.

"A new film law introduced in Bulgaria two years ago lead to an immediate increase in the number and quality of films produced domestically. These new measures will also be of interest to filmmakers," Dakovska told a workshop on developments in the region at the two-day industry forum, part of the 16th annual Cottbus Festival of East European Film.

The festival has a special focus on film from Bulgaria and Romania this year. Both countries are scheduled to join the European Union in January.

Bulgaria's new film industry law, introduced in 2004, is helping reshape national cinema and boost production, even though moves to boost an annual $3.9 million state film fund through the imposition of a levy on television, advertising and exhibition profits failed after fierce opposition from those sectors.

As of September, 12 of 15 films made in the past two years had been produced after the introduction of the new law, Dakovska said.

"Until very recently, Bulgaria rarely produced more than four feature films a year, and in some years, none at all," she said.

Introduction earlier this year of a new film law in Romania also has done much to change the landscape of film production, Romanian Film Promotion's Miahi Gligor said.

Romania's local filmmaking industry reached its lowest point in 2000 when no full-length features were produced at all, Gligor said.

"Since then, there has been a spectacular rebirth. In 2005, we produced 20 features, of which nine were financed locally and 11 were co-productions," Gligor said.

A string of internationally acclaimed films by a new wave of young Romanian filmmakers is helping put the country back on the movie map, he added, citing such films as Corneliu Porumboiu's Camera D'Or winner "12:08 East of Bucharest" and Cristi Puiu's "The Death of Mr Lazarescu."

Romania's film law provides for an annual state fund of €6 million ($7.7 million) drawn from various sources, including a levy on DVD, television, exhibition and advertising sales, gambling profits and a percentage of income raised by the privatization of former state-owned cinemas.

Grants of up to 50% of a film's budget -- more in certain special cases -- are available.

Doina Bostan, head of international cooperation at the Bucharest-based National Cinema Center, said that 60% of the money allocated this year has gone to feature film projects.