Cyprus: Filming In Cyprus: A Practical Guide To The Subsidy Scheme
The Council of Ministers with its decision number 1433/2017 taken on the 27/09/2017 has approved the Scheme for the promotion of the film industry and the promotion of the Republic of Cyprus as a country for filming. The said Scheme constitutes the policy framework which is based on development, financial and tax incentives as well as on the Commission Regulation. The Scheme shall end in December 2020 and its annual budget is €25 million.
1. Committee's assessment criteria for approval
- assesses producers' proposal for aid based on the economic and cultural benefits for the Republic of Cyprus;
- recommends the amount of the production expenditure which satisfies the pre-requisites with respect to the cash rebate or the issuance of a tax credit certificate;
- recommends tax deduction in relation to Eligible Infrastructure and Equipment Expenditure and the investments which satisfy the criteria for the issuance of a tax deduction certificate;
- determines the relevant requirements and pre-requisites and
- determines whether an Applicant satisfies the relevant pre-requisites of the initial application and the final application for the cash rebate amount or the issuance of a tax credit certificate upon completion of the production and/or the application for tax deduction for investments in infrastructure and equipment.
2. Type of Proposals for examination
- Cinematograph 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.
- Television films (drama)
- Television series or mini-series
- Digital and/or analogue animation
- Creative Documentary
- Transmedia and Crossmedia
- Reality Programs which directly or indirectly promote the Republic of Cyprus and its culture
3. The Incentives
a. Cash Rebate
The annual available sum for this aid shall not exceed €25,000,000. The aid shall be granted based on the following parameters and pre-requisites:
- The maximum aid shall represent 35% of the eligible expenditure (defined below) made in the Republic of 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 cyprus film industry, the above amounts should not exceed 50% of the total production budget.
- 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. The proposed cultural criteria are defined below.
- The aid sum shall be payable with the completion of the shooting of the scenes and following the accounting check of the Eligible Expenditure for Production which will be submitted to the Committee and a Final Approval Certificate will be issued. The sum shall be paid within 90 business days following the date of issuance of the Final Approval Certificate.
b. Tax Credit
This measure constitutes an aid (as a reduction of the applicable corporate tax) for the Applicant. This aid shall be granted based on the following parameters and pre-requisites:
- The maximum aid shall represent 35% of the eligible expenditure made in the Republic of 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.
- The Applicant must satisfy certain criteria, which will ensure that the aid promotes, amongst other, the Cypriot and/or European and/or world culture. The proposed cultural criteria
- The sum to be deducted from the taxable income shall not exceed 50% of the Applicant's taxable income for the tax year within which the production is made. The credit, to the extent that it is not granted due to the above percentage restriction, shall be carried forward and be paid within the next five (5) years, subject to the above percentage restriction.
- The tax credit is not transferable to any third person. In the event of voluntary or involuntary liquidation or dissolution of the Applicant, the tax credit automatically ceases to have any value in the assets of the legal person to which it was granted.
c. Tax Deduction for Investments in infrastructure and equipment
- Every Applicant investing in film production infrastructure and technological equipment such as filming studios, audio-visual processing premises, filming equipment, digital audio-visual means, etc., shall be entitled to have the sum of his investment deducted from his taxable income. The relevant application form for tax deduction can be found on the Committee's website.
- The aid cannot exceed 20% of the Eligible Expenditure in the case of small enterprises and 10% of the Eligible Expenditure in the case of middle-sized enterprises.
- The investment, in the case it relates to equipment, must remain within the Republic of Cyprus for a period of at least 5 years.
- Eligible Expenditure for the particular tax deduction are the investment expenditure in tangible and intangible assets ("Eligible Infrastructure and Equipment Expenditure")
- The job vacancies that are directly created must satisfy all of the following pre-requisites:
- they are created within three years from the completion of the investment;
- there is a clear increase in the number of employees in the particular business establishment, compared to the average of the preceding twelve months;
- they are preserved for a minimum period of three years from the date when the vacancy was filled for the first time.
d. Return of VAT on Expenditure
Value Added Tax rates in the Republic of Cyprus are 19%, 9% and 5% on all products and services provided within the Republic of Cyprus and 19% and 5%, on all taxable imports.
The Applicant is entitled to VAT return in relation to any expenditure, as every natural or legal person in a Member State of the EU has.
In the respect, the Competent Authority shall study the promoting of Interstate Agreements for mutual VAT return with the following countries: Russia, China, India, Ukraine, Canada, Australia, Japan, New Zealand, Thailand, Egypt and the United Arab Emirates.
With respect to the United States of America, where no VAT is applied but only Sales Tax that is non-refundable, the Competent Authority may examine the introduction of relevant measures.
VAT returns arise within 6 months with respect to the legal person who carries out the foreign filming production in Cyprus from the end of the last deadline for submitting the VAT declaration for the specific VAT period during which the expenditure occurred or from the date on which the application for VAT return is filed
4. Eligible Expenditure
- Accommodation in Cyprus
- Travels in Cyprus
- Incoming and outgoing flights of cast and crew
- Food in the Republic
- Equipment and Grip Rental (from Cyprus)
- Props' Purchase
- Construction and Interior Design
- Transport and Transport Service Vehicles
- Insurance and Accounting Services
- Fee for licensed locations
- Post Production Services related to the purpose of the production in Cyprus
- Compensation of Cast and Crew (based on the number of days during which the cast and crew members provided their services to the production carried out in the Republic of Cyprus, as a percentage against the total number of working days pursuant to their employment contract for the whole production)
- Dispatch and other costs for equipment and other materials
5. Cultural Content Assessment Criteria:
- Productions which promote Cypriot, European or international stories (fiction or real).
- Productions which takes place in Cyprus or another European country.
- The main plot of the film and elements of the subject film are based on a literary work.
- The main plot of the film and elements of the subject film are based real characters / historical figures / legendary figures
- The main plot of film rotates around modern or historical issues of Cyprus or Europe or of the work in general (politics, religion society, culture)
- The main plot of film or elements of it refer to important – relevant worldwide events – fiction or real.
- The valorisation of the multiplex architecture, archaeological and natural heritage of Cyprus or of the cultural exhibits and attractions
- The production incorporates at least one European language.
- Use of the Greek language in the production dialogue in a way which contributes to the development of the story
- The production shows and promotes diversity and culture
- Incorporation of Cyprus Company (the name of the company shall carry the recognition initials "AVC" (Audio Visual Cyprus)
- Administration of Company and Maintenance
- Liaison with Accountants and Auditors
- Liaison with Authorities and setting up of meetings
- Preparation, Advisory and Submission of Online Application Accompanied Organisation of Supporting Documents
- Committee Assessment Form and provision of facts which thoroughly reinforce the rating of the production
- brief description of the film, including the report on the beneficial promotion of the Republic of Cyprus and the Cypriot / European culture and the report on the accessibility to the audience to which the film is addressed.
- Filmography of the Producer
- Biographical Data of the basic members of the production team
- Date of Commencement
- Expected Date of Completion
- Post production date of completion
- Agreements with all relevant parties
- Detailed Expenses Budget in EURO
- Certificate of Incorporation
- Certificate of Directors and Shareholders
- Submission of Production Programme
- List of Actors and Crew Members (with passports)
- Sworn Affidavit for possible state aid received or applied
- Any other documents reinforcing the assessment, experience and history of the producer
- Financial Plan and Sponsorship (if any)
- Proof of Funds
- Monitoring the Application and Assessment Process
- Monitoring for the Pre-Approval Stage (Temporary certificate issued)
- Monitoring of the Final Approval Stage