Hungary renews 20% tax rebate
Law revised to meet EC demands
The revised law ads recommendations made by the European Commission during negotiations geared to bring Hungary's film sector in line with EU standards, but retains the 20% tax rebate that has lured filmmakers from around the world over the past four years.
Until the law's passage, producers from Hollywood to Asia worried the EC would insist Hungary scrap the rebate, an equivalent tax deduction on all film productions made there.
The rebate, initially passed in the Film Act of December 2003, has brought in foreign film productions including Hollywood features such as "Hellboy II," shot at the Korda Film Studio outside of Budapest in 2007.
The construction of Korda Studios, a state-of-the-art facility owned by Hungarian real estate tycoon Sandor Demjan, which opened its doors last year, underscores the booming business expected in Hungary's film service industry due to the tax scheme. Upcoming feature "Kameleon," from helmer Krisztina Goda, will be the first Hungarian film to shoot at Korda Studios.
Other film-industry developments prompted by Hungary's film-friendly tax system include the launch of the Stern Film Studio & Media Center, located just north of Budapest.
Among changes in the 2008 law are the mechanisms for an EC-mandated Cultural Test (which measure cultural content) and financial restrictions, such as a 50% ceiling on government support for co-productions between Hungary and other nations.
The law also reduces the limit for state financing of a single domestic movie to HUF 237 million ($1.5 million) from $3.2 million, and to $3 million for a foreign co-production.
Films categorized as "difficult" by EC cultural/financing standards can receive up to 90% finding from the government under new regulations.
The EC has yet to ratify this law, and Hungarian filmmaker Zsolt Kezdi-Kovacs, who participated in negotiations with the EC, stated the Commission may demand revisions in the legislation, including amendments to the 20% tax rebate which some critics outside of Hungary consider unfair competition.
But Hungarian Motion Picture Foundation Head of Press Kata Olah told Variety that the 2008 law was based on EC input. "We integrated everything they wanted and suggested during our negotiations with them," said Olah. "I don't think they'll ask for changes."
