Published on October 30, 2018
1. The Cyprus Film Scheme October 2018
2. The Cyprus film scheme Committed to boosting the prospects of its film industry, Cyprus has introduced a package of incentives encouraging international producers to select Cyprus as their film destination (the “Scheme”). The Scheme grants tax incentives including cash rebates (partial refund of the amount invested on the film) or tax credits, as well as tax discounts on investment made on equipment and infrastructure, and VAT returns on expenditure in scope. Who can apply? Eligible entities must meet the following criteria: ► be private entities with the initials AVC (Audio Visual Cyprus) in their name ► be registered in Cyprus or another EU Member State, provided that they carry on business in Cyprus through a branch or office following approval of their application to the Scheme. Eligible entities are restricted to one audiovisual production each under the Scheme, with an exception for certain group productions of documentary or TV series. There are no restrictions on foreign ownership participation in the eligible entity. What films are eligible? The following audiovisual films are eligible to apply under the Scheme: ► Feature / long Films (minimum duration of 1 hour, or 45 minutes when in IMAX) ► Television film, series or mini- series ► Animated films (computer generated or otherwise) ► Creative documentaries ► Transmedia and cross-media productions (using different media) ► Reality programmes (provided they promote Cyprus and its culture) Certain types of audiovisual productions are expressly excluded from the Scheme, including sporting events, game shows, current affairs or talk shows, as well as certain educational and lifestyle programs. What grants and tax incentives are available? The incentives under the Scheme are: (1) cash rebates (2) tax credits (3) tax allowances for investment on equipment and infrastructure, and (4) return of VAT on expenditure in scope. Applicants can apply for either the cash rebate or the tax credit. If applying for a cash rebate, an applicant may also apply for a tax allowance and return of VAT. Similarly, an applicant that selects to apply for a tax credit under the scheme may also apply for a tax allowance and return of VAT. In all cases, the total aid cannot exceed 50% of the total production budget (or 60% in the case of a co- production). However, this limit can be lifted if the production can be deemed to be beneficial for the economy, culture of the development of the Cypriot film industry.
3. What expenditure is eligible? A wide range of investment and expenditure is covered under the Scheme, including, without limitation: ► production services ► labour costs and wages for cast, extras and crew ► accommodation in Cyprus ► audio equipment, camera and lighting rentals ► vehicle (air, ground and sea) rentals ► catering ► scenery constructions ► electricity and generators ► air and ground travel ► professional services (legal, accounting, insurance). Incentive 1 – Cash rebate The cash rebate incentive has the following key features: ► maximum aid is 35% of eligible expenditure made in Cyprus ► minimum expenditure must not exceed 50% of the of the total production budget and depends on the type of film, as follows: - Feature films: €200,000 - TV drama series: €100,000 - Documentaries: €50,000 - TV programmes: €30,000 ► the production must satisfy the authority’s cultural assessment ► maximum aid for each production is €650,000. Incentive 2 - Tax credit This incentive effectively lowers the corporate tax payable by a successful applicant. Its key aspects are the following: ► maximum aid shall represent 35% of eligible expenditure made in Cyprus. ► minimum expenditure depends on the type of the film and must not exceed 50% of the total production budget ► the production must satisfy the authority’s cultural assessment ► the tax credit must not exceed 50% of the total taxable income in the year the production is made ► Tax credit may be carried forward on certain conditions. Incentive 3 – Tax allowance This incentive provides tax allowances for investment in eligible infrastructure and equipment, reducing taxable income. ► the aid cannot exceed 20% of eligible expenditure for small enterprises and 10% for medium enterprises ► eligible infrastructure and equipment includes premises, studios and filming equipment ► eligible investments in tangible and intangible assets are also covered subject to conditions ► equipment must remain in Cyprus for at least 5 years Incentive 4 – VAT returns A successful applicant will be entitled to a VAT refund for qualifying production expenditures incurred in Cyprus by natural or legal persons from third countries which are related to the implementation of a production. Application process The application process comprises: ► a preliminary approval stage (where the bulk of the documentation must be submitted), on completion of which a Temporary Approval Certificate is issued; and ► a final approval stage, after which a final certificate is issued. Supporting documentation required to be submitted will be determined according to the incentive being applied for. Contact us to discuss your precise requirements. Antoniou McCollum & Co. LLC Antoniou McCollum & Co. LLC is a law firm incorporated under the laws of Cyprus with reg. no. HE364314 and supervised by the Legal Council and the Cyprus Bar Association with reg. no. 640. This document is intended for general information purposes only and no part of this document is intended to, constitutes or can be relied upon as legal advice or the expression of legal opinion. © 2018 Antoniou McCollum & Co. LLC. All rights reserved. No reproduction through any means of part or whole of this document is allowed without the express written authorisation of Antoniou McCollum & Co. LLC. amc.law