The Beginner’s Guide to International Film Financing
Where production goes, economic growth soon follows. For many jurisdictions, this means local economies receive a boost from the production spend, as well as the added benefit of attracting tourism, as is the case for countries like New Zealand. For these reasons, many opportunities are available outside of the US (especially in Europe!) for filmmakers to receive international financing from government funds.
While the US does provide certain tax breaks for individuals and companies who invest in film, there are no specific government funds available to American producers. Instead, financing options may include equity, bank loans, loans against tax incentives, grants, and crowdfunding.
Securing funding, as we have discussed throughout our film financing series, is one of the most important parts of the filmmaking process. You need money to get your project off the ground, and choosing an international filming location, and financing, may be the best option for some. But it's not always easy. This guide will help you to understand the requirements to qualify for international financing, and prepare for the necessary to steps to take your project abroad.
Requirements to Qualify for Foreign Financing
For foreign producers to qualify for non-US government funds, a project may need to pass a cultural test for the specific jurisdiction they plan to film in, along with the following prerequisites:
- Qualifying personnel (ATL and BTL) must carry a European passport or, If outside Europe, one from whichever jurisdiction they wish to film.
- Have an ongoing business or production concern in their respective jurisdiction.
- Prove that their project is homegrown with an interest in bringing more attention to that country.
The Cultural Test
In 1992 (followed by revisions in 2017) the Council of Europe Convention on Cinematographic Co-production formalized and codified how producing entities in different European countries can work together under the same rules for purposes of qualifying for incentives. To do this, The Council created a cultural test for productions to pass in order to qualify for these incentives.
The cultural test is composed of various elements, which each carry a certain number of points. These points are added up to either qualify, or not qualify, a project as having European Nationality, and therefore eligibility, or not, to receive European funds.
It should be noted that the UK has a similar cultural test that may qualify a production for government funds out of that region.
These points are connected to specific questions that determine the authentic nationality of a project and incentivize the local government to provide funds:
- Creative Elements: For example, who is the director, production designer, costumer designer, or composer?
- Talent Elements: Who is the #1 actor (meaning the one who works the most days)?
- Physical Elements: Where is the production actually being filmed? What is the story about? Where is post-production taking place?
Not only do these points determine a production’s nationality, or what the perceived nationality will be, but they will also become important to the sale of the IP to a broadcaster in that country, or possibly many countries.
To find out if your production may qualify, The Council of Europe Convention on Cinematographic Co-production released this revised document on how these points add up.
Co-Productions vs. Collaborations
The Council's document also lists out how to create a co-production, and the associated benefits. Meaning, if two or more producers of different nationalities team up, they are able to receive funding from each of their respective governments.
Many countries' governments (except for the US) have formed treaties that dictate how producers can work together to access these funds, and such treaties benefit productions if they are looking for multiple avenues of funding. For example, an Italian producer and a Spanish producer can work together on a co-production, making them eligible for both Spanish and Italian subsidies because they are working under a co-production treaty through the European Convention.
A US producer doesn’t have direct access to foreign money unless they collaborate with an established foreign producer. Collaborations are based on trust and need a formalized contract enforced by a lawyer in the foreign country where the funds are being given, to ensure those funds will be made available to the US producer from the foreign producer. This form of partnership can be a risky and complicated business deal since a US producer doesn’t receive the money directly from the foreign government.
The movie Shame is an example of a collaboration (not a co-production) between a British and US producer. Both of the producers set up separate companies in each of their respective countries to access incentives. They were then able to make purchases through each of their companies in order to qualify for their jurisdiction's unique incentives.
Avoiding Disruption to Your Production Plan
If you’re planning on accessing government funds for your project, be sure to understand the rules ahead of time, create a production plan, and stick to it in order to avoid losing points that could disqualify you from receiving government funds. For example, if the majority of your production is entirely European, but then you decide to take post-production over to the US for editing, that slight change could completely disrupt your production plan, lose you the points, and jeopardize your award.
In most countries, you have to wait until the end of post-production, when all the points are tallied up, in order to access the funds. A few countries will give you money up front, but they reserve the right to revoke points if the production doesn't follow the original plan to keep work within the country providing the funding.
Copyrights are another element to consider before mapping out a plan for international government subsidies.
If you try to qualify for incentive money, a country might require the production’s copyright to stay within that country for a specific amount of time. For example, in order to qualify for a German subsidy, your production will require a German producer AND a German distributor be attached to the project, with the intention that the copyright stays in Germany for 2 or 3 years.
It’s important to know where and how long a copyright needs to stay within a specific country before starting a project to ensure your production plan doesn't get disrupted later on in the process.
Where to Start?
If you’re ready to begin an international financing plan, Entertainment Partners is here to guide you!
Be sure to explore our interactive map to find out which incentives are available to you, how to qualify, and whether your project requires a production service provider and/or producer to begin accessing funding. It will also include a link to the film commission for each jurisdiction that offers incentives to find out which rules apply.