Chief executive Vaclav Klaus had argued that the law, which streamlines tax incentives for foreign productions, was an unnecessary favor to the film industry.
The Czech Parliament has overruled President Vaclav Klaus’ early-November veto of a new law redefining support for film and television production in the Czech Republic. The Czech president had said the new law is unnecessary, arguing that there is no reason why the film industry, a business like any other, should receive state funding. Had his veto survived in parliament, the law’s various new measures, which are designed to streamline tax incentives for foreign productions in the Czech Republic, would have been nullified.
The law establishes a new State Cinematography Fund as the main organization sponsoring Czech film production, European co-productions, film festivals, distribution, digitalization and the tax incentive system. The whole process of granting the incentives is expected to become more transparent and continuous.
The Czech Film Commission reported in a press release that the state budget proposal for 2013 was approved on December 19 and 500 million Czech crowns ($26,274,400) was allocated for the tax incentives supporting film production in the Czech Republic –- up from 300 million Czech crowns ($15,679,300) in 2011.
Because the new film law’s tax-incentive allocation exceeds the extent of support permitted by the European Union, according to EU rules, it has to be ratified by European Commission. Ratification can take up to three months.
The current tax incentives include a 20 percent rebate on qualifying Czech spending and 10 percent on qualifying international spending, with the rebate capped at 80 percent of a film’s total budget.
“The only new thing is that the incentives will no longer be administered by the Ministry of Culture, but instead the Cinematography Fund will take over this function,” said Denisa Strbova, project manager at Czech Film Commission. “One of the positive changes is that the incentives should become transferable from one year to the next to allow a continuous project.”
The Czech Republic had become less competitive as a place to shoot in Central Europe than Bulgaria, Hungary and Romania, because it depended on an awkward system in which foreign productions had to close their budgets at the end of the calendar year to benefit from the tax incentives, effectively excluding projects with incompatible shooting schedules. Strbova believes that the new year-to-year transferability will help put the Czech Republic back on top in terms of providing production services to foreign productions.
“There are many projects we know about awaiting the decision [on the law] to decide if they will or won’t shoot in Czech Republic, depending on the status of the incentives,” she said.
The new law is more about the reorganization of the funding structure than about an exact sum of money. Under the new law, half of Czech film production funding would come from commercial television stations.
Jana Cernik, head of development and training at the Czech Film Center, told Film New Europe that the film law outlines the sources for national film funding, which include one percent from the sale of cinema tickets, two percent from advertising revenues from commercial TV stations and equally small percentages from other TV platforms.
The Hollywood Reporter reached out to President Klaus for comment, but his spokesman, Radim Ochvat, declined on his behalf. Ondrej Zach, senior vice president for programming and acquisitions for HBO Central Europe and executive director of HBO Czech Republic, also declined to comment at this stage.