A state aid scheme for movie productions in Romania could lead to a fivefold increase in the local film industry, up to some EUR 250 million per year. Such a scheme would also help create some 4,000 new jobs in the creative industries and related ones, according to a PwC Romania study.

The current annual turnover of the local film industry is around EUR 50 million, some 80% of which comes from foreign productions shot in Romania.

“Romania has indisputable strengths in this sector (very talented film-makers, extremely diverse and appealing shooting locations, the positive imagine that Romanian cinema enjoys abroad as a result of the movies awarded in the last years), but without financial and tax instruments to support and attract international movie productions, all this potential remains untapped,” said Mihaela Mitroi, PwC Partner, Tax and Legal Services Leader, Romania, Moldova and SEE.

The film industry’s growth would also generate an indirect multiplying effect for the local economy worth about EUR 850-974 million annually. Tourism, transport, and the service sectors would be the main beneficiaries. Thus, the scheme would also have a positive budgetary impact, as it would lead to revenues of EUR 120-130 million for the state budget.

“At the moment, 20 state members of the European Union are applying financial support schemes for the film industry and the results of implementing such schemes had been quite spectacular in countries such as Czech Republic or Croatia, which have drawn in many foreign movie productions,” Mihaela Mitroi explained.

The state aid schemes are diverse, based on fee and tax reduction or exemption but also direct subsidies.

The scheme proved to be so successful in the Czech Republic that nowadays authorities in Prague take into consideration increasing subsidies from 20% to 25% of eligible costs of an international film produced in the Czech Republic, according to PwC.

The Czech Republic grants subsidies and tax incentives up to 20% of the local costs. The average annual budget for this scheme is EUR 45 million during 2015-2018. Hungary grants subsidies and tax incentives of 25% of the local costs with an average annual budget of EUR 38.5 million. In Poland, granted subsidies and tax incentives account for 50% of the production budget, but no more than EUR 1 million, with an average annual budget of EUR 30 million.

The film industry has registered a compounded annual growth rate of 63% in the Czech Republic, 50% in Hungary, and 13% in Poland, due to these state aid schemes, according to PwC.

PwC Romania has proposed the application of a similar state aid scheme for the film industry in Romania. This scheme would be implemented for a period of five years, with an average annual budget of EUR 30 million. This could reimburse 25% of the total eligible costs of an international movie production made in Romania and 50% of the income tax paid in Romania by eligible non-residents individuals.

Top 20 foreign films shot in Romania

editor@romania-insider.com

(Photo source: Castel Film Studios on Facebook)