Despite of success of Polish filmmakers worldwide, Poland has not proven to be a very attractive market for international film production, especially in comparison to other Central European countries. Most of them have introduced systems of financial support for international productions which take place within their territories or which are carried out in co-operation with local partners as co-productions. Up until now, Poland has not offered any such financial incentives which would aid in making Poland more competitive on the filmmaking market. However, the brand new Polish Act on financial support for audiovisual production, which just entered into force on 11 February 2019, is expected to finally give Poland a competitive edge.
The cash rebate system
The Act provides for a 30% cash rebate for qualifying Polish costs (but no more than 80% of the total production costs). The maximum amount of an individual grant of financial support is PLN 15 million (EUR 3.33 million / USD 4.05 million), and the maximum total amount of financial support which may be granted to one producer/entity in a particular calendar year, is PLN 20 million (EUR 4.76 million / USD 5.4 million). The annual budget earmarked for such financial incentives will amount to approximately PLN 200 million (EUR 47.6 million / USD 54 million), a minimum of 10% of which must be allocated for support to animation production.
The Act specifies the categories of qualifying Polish costs, which include those incurred on account of the following:
- pre-production, such as those costs incurred when searching for the shooting locations of audiovis-ual productions;
- the realization of audiovisual production;
- set design and costumes;
- obtaining audiovisual production technical equipment;
- travel, accommodation, and meals;
- editing and post-production;
- animation and special effects production;
- costs related to people’s involvement in the production of an audiovisual work, including income taxes and social security contributions;
- copyrights and licenses for music and archival materials used in an audiovisual production;
- production of formats enabling disabled persons to access audiovisual works, including described video and closed captioning.
The costs of goods or services will be considered to be “Polish” for the purposes of the Act if the goods or services are:
- purchased from entrepreneurs with a registered office or branch in Poland; or
- purchased or provided in Poland (including the rental or lease of infrastructure).
Which productions may apply?
Cash rebates are available to the producers or co-producers of feature films, animations, documentaries and TV series, or to an entity providing an audiovisual production service if they have their registered office (or at least an agency) in Poland; have a sufficient output (meaning that they were a producer of an audiovisual work which was distributed, broadcast, or presented at at-least one FIAP accredited film festival) or at least employ an individual having a sufficient filmmaking experience; have signed a co-production agreement (or an agreement for the provision of services) regarding a production on the Polish territory, meet the legal requirements for valid state aid.
Additionally, in order to apply for this rebate, the production should meet certain minimum criteria regarding its planned runtime and a certain minimum of Polish eligible costs. These minimum criteria are set-out in the regulations of the Ministry of Culture (for example the respective minimums as regards feature films for 2019 are: a runtime of 70 minutes and PLN 2.5 million in costs).
The procedure
The incentive system is managed by the Polish Film Institute. Producers may apply for this support between 2 and 6 months prior to the beginning of production. Importantly, the application may only be submitted if at least 75% of production’s cost are confirmed.
The application fee is 0.05% of the estimated amount of support expected, but no more than PLN 1,000 (about EUR 240 / USD 270).
The application’s “cultural test“ should be completed by the producer when preparing it. This section of the application sets criteria and scores the impact of the production on the development of Polish audiovisual market and the promotion of Polish culture. With regards to this test, the applicant producer may, inde-pendent of the support application, apply for a non–obligatory certificate which confirms that the project meets the criteria set-out in this section of the application. This certificate, valid for 4 years, does not how-ever guarantee that the production will receive the funding.
The Institute has up to 28 calendar days to assess the application. If the application receives a positive as-sessment, the parties (i.e. the Institute and the applicant) will conclude a financial support agreement. The payment of the funds will be accounted and transferred into an escrow account by the Institute. The benefi-ciary of the rebate will then be able to withdraw from the funds on the escrow account only after a final re-port on the audiovisual production is presented to and positively assessed by the Institute.
What do we think?
The Polish film sector has long waited for regulations aimed at improving Poland’s position on the Europe-an filmmaking scene. Given the incentives schemes and infrastructure already in place in other Eastern and Central European countries, the Polish legislature had no other option but to face this tough competition head-on. The question, however, is whether the new financial support system will be attractive enough to attract potential investors and co-producers.