On 27 September 2017 the Cabinet of Ministers has approved a new scheme (the ‘Filming Scheme’) with the purpose of attracting individuals, local and overseas companies specialising in the filming production to develop and relocate their business and activities to Cyprus by offering them various attractive tax incentives as detailed further below.
The Filming Scheme was developed by the Unit of administrative Reform of the Presidency in cooperation with the Cyprus Investment Promotion Agency (CIPA) and the Ministry of Finance in accordance with Regulation 651/2014 of the European Commission.
UBTATE/AMMENDMENTS:
In addition, the Council of Ministers decision number 1433/2017 taken on the 27/09/2017 then modified on the 2bd and 31st January 2019.
This year, Cyprus is actively trying to take a piece of the pie of the movie industry by introducing the following interesting and rather simple tax incentives as part of its “Olivewood” incentive plan
Production companies that opt to film in Cyprus will be able to choose between cash rebate or tax credit and can also benefit from tax discounts on investments made on equipment and infrastructure, and VAT returns on expenditure in scope.
Qualifying production categories include, amongst others, feature Films (including animation), television Series or mini-series, documentaries for Theatrical or Television release, animation (digital or analogue), television research programs and natural history.
A. Who is eligible to apply for the Filming Scheme?
1) individuals in the private sector;
2) legal entities shall carry the special purpose recognition initials AVC (AudioVisual Cyprus) following their name;
3) legal entities which shall be registered in the Republic of Cyprus, or any other European Union Member State, provided that they carry on business in the Republic of Cyprus through a branch or office in the Republic followed the approval of their application; and
4) shall be strictly restricted to one and only audio-visual production. The integration of more than one production under the same Applicant (slate of films) is expressly prohibited, unless certain requirements are satisfied.
It is noted that there is no restriction on the percentage of foreign ownership participation.
A. What are the Tax Incentives?
The Filming Scheme provides the potential investors with various incentives including:
- A return of VAT on film expenditure.
- Cash rebate – This can be applied together with the tax deduction for investments in infrastructure and equipment as well as with the VAT return.
- Tax credit – This can be applied together with the tax deduction for investments in infrastructure and equipment as well as with the VAT return, by completing the relevant applications.
- Tax Deduction for investments in infrastructure and equipment
- Return of VAT on expenditure
- can allow a tax allowance of 20 per cent for investment purposes in filming infrastructure and relevant equipment which may be varied in accordance with the enterprise size.
- enables the potential investor to choose to apply either for cash rebate where the annual available sum cannot exceed the amount of Euro 1,500,000 or the tax credit which shall be considered as an aid for the reduction of the applicable corporate tax, considering that the potential investor must choose which incentive shall take advantage off, given that the investor cannot apply for both. However, the potential investor may choose to apply to obtain the available tax allowance for the investment in the eligible film production infrastructure and equipment such as filming studios, audio-visual processing premises, filming equipment etc, together with the incentive of the applicable VAT return. The potential investor may apply for the tax allowance for the investment in infrastructure and equipment as well as to obtain the VAT return.
B. Indirect Tax Incentives
During filming in Cyprus, the actors and the entire production scheme can take advantage the favourable tax planing incentives and solutions offered by Cyprus to mention a few:
- Attractive Tax Incentives for Corporates & Individuals
- Attractive IP regime
- CY/ EU Passport / Citizenship schemes.
- Special Tax Status “Non Dom” for individuals where dividends from around the world are tax free.
- Creation of Trust or Holding Companies
Excluded from the Scheme:
Companies Facing Financial Difficulties are excluded from the Scheme.
C. Eligible Expenditure Covered by the Scheme
- Provision of production company services
- Labour costs (including of foreigner employees)
- Wages for cast, extras and crew
- Accommodation in the Republic of Cyprus
- Per diems of staff
- Audio equipment rental
- Catering and food expenses
- Scenery construction
- Artistic construction costs
- Diving services
- Electricity and other common services
- Generators
- Transport and vehicle rental services
- Laundry and cleaning services
- Licenses for use of locations and archeological monuments
- Post-production (sound and image)
- Professional services (such as insurance, legal and accounting services)
- Camera and lighting rental
- Rental of marine vehicles
- Rental of mobile toilets
- Rental of office furniture and office set-up costs
- Rental of aeroplanes/helicopters
- Rental of production offices, warehouse space, workshop facilities, storage space and stages.
- Rental or purchase of props
- Rental of water tanks and related marine services
- Repairs & restorations
- External production crew rental with or without staff
- Security services (police, fire brigade, army, ambulances and medical services)
- Pyrotechnic services
- Scenery
- Special effects services
- Shipping
- Stunt services
- Telecommunications
- Air travel to and from the Republic of Cyprus (flights and sea travel)
- Visual Effects services
- Costume Rental
- Cost of registration of applicant company up to 1,000 euros plus out of pocket expenses payable at the Registrar of Companies in Cyprus in relation to the registration of the applicant company.
- Animal services.
D. Cultural Test
For a production to be eligible for aid, the Applicant must satisfy certain criteria, which will ensure that the aid promotes, amongst other, the Cypriot and/or European and/or world culture. This cultural test is performed based on a predetermined detailed scoring system which can be provided upon request.
E. Expected Minimum Expenditure in Cyprus
Minimum expenditure in the Republic of Cyprus which amounts to at least €200,000 in the case of feature films (long films), €100,000 for television drama series or self contained drama films, €50,000 for documentaries for television or cinema broadcast and €30,000 for other television programmes (or the equivalent in any other freely convertible currency). It is noted that in any case of minimum expenditure in the Republic of Cyprus, the above amounts should not exceed 50% of the total production budget.
F. Application Requirements
To be eligible for the scheme the candidate must accompany together with the relevant application forms the following evidence / paperwork:
- A registered company in Cyprus, or another EU territory
- A financial plan of the project
- Proof of funds
- The scenario of the project*
- CV’s of the casting, director, producer etc.
Note: – Companies Facing Financial Difficulties are excluded from the Scheme.
G. Eligible Scenario / Content
The films’ content should fall within the below categories:
a) Cinematograph Films – Long Films
Long Films Including those direct-to-video shot, where the project is a film commonly screened as the main attraction for the public in commercial cinemas with a duration of at least 60 minutes or, in the case of a large format (IMAX) film, of at least 45 minutes.
b) Television films (drama) or Television series or mini-series including;
- Television films
- Television series or mini-series
- Digital and/or analogue animation
- Creative documentary
- Transmedia and Crossmedia
- Reality programmes which directly or indirectly promote the Republic of Cyprus and its culture
Excluded Scenarios / Filming Content
- Any public or special performance(s) organized for filming or other purpose;
- Any sporting event;
- Television game shows other than reality programmes;
- Current affairs programmes or talk shows;
- Educational Programmes presenting/explaining hobbies, projects, etc.;
- Review, Magazine-style or lifestyle programmes.
H. The Application Process
Submission of Online Application –> Temporary Approval Certificate –> Review by Committee –> Issuance of Approval Certificate within sixty (60) business days from the expiration date of the period for submission of applications –> Completion of Filming –> Submission of certified auditor report –> Issuance of Final Approval Certificate (FAC) –> Bank transfer within 90 business days from the FAC date of issuance
How we can help?
- We can advise you on how to best structure your investment, as well as on the possibility to obtain any single and/ or combination of the relevant tax incentives.
- Assistance with the application
- Financial advice
- Liaising with the relevant authorities
and arrange with all steps and procedures needed to be done.
- Submission of Online Application
- Temporary Approval Certificate
- Review by Committee
- Issuance of Approval Certificate within sixty (60) business days from the expiration date of the period for submission of applications
- Completion of Filming
- Submission of certified auditor report
- Issuance of Final Approval Certificate (FAC)
- Bank transfer within 90 business days from the FAC date of issuance
About Corpera Ltd
We are based in Cyprus and specialized in international tax planning, international company formation and international business consulting.
We work primarily with professional intermediaries representing the worlds largest legal and tax advisory providers. We provide high level Cyprus and international tax advice and assist our clients with the formation and ongoing administration of Cyprus companies, investment funds, international trusts, special license firms and offshore structures.
Our partners, are experts in the field of Cyprus and offshore tax planning.
You can contact us to [email protected] or Tel. 25.373050
Source: some of the above info have been collected from CYAUSE Audit Services.
