Producers and media companies are invited to utilise the Cyprus landscape and infrastructure and enjoy a variety of legal, corporate and tax incentives for filming in Cyprus under the new Cyprus Filming Scheme.
Filming in Cyprus has now been made even more attractive due to the introduction of the scheme of incentives aiming to promote the film industry and the promotion of Cyprus as a filming production hub. The Cyprus Filming Scheme icludes a number of incentives designed to encourage the filming and production of movies and audiovisual content in Cyprus. Applicants can choose from tax credits or cash rebates in combination with a tax deduction for investments in infrastructure and VAT returns on expenditure.
Which companies can qualify for the Scheme?
Companies in the private sector who have been registered in Cyprus or any EU member state and carry out business in Cyprus directly or through a branch office are eligible. They also need to carry the recognition initials AVG (Audio Visual Cyprus) and promote at least one audiovisual project or a small series of TV programmes.
Who examines the applications?
Applications will be examined by a special committee comprising senior officials from the Ministry of Education and Culture, the Ministry of Finance, the Ministry of Tourism as well as a senior officer appointed by the Board of Directors of Invest Cyprus.
Which audiovisual productions qualify under the Scheme?
A number of audiovisual contents can benefit from the incentives awarded by the Scheme. While it is a requirement that all audiovisual production must promote the culture of Cyprus as well as the island in general, there is a vast qualifying plethora of content, such as:
- films, including documentaries, intended for broadcast in commercial cinemas, with a duration of no less than 60 minutes and in the case of IMAX films no less than 45 minutes;
- TV or Cinema documentaries, including factual programmes or natural history;
- a series of TV programmes or mini series of no more than 15 episodes per year or 600 minutes per year;
- Reality programmes, live or recorded, promoting culture and the Republic of Cyprus abroad.
Any content that is based on sports or current events, is of pornographic nature, based as a game show or a review, magazine style or lifestyle production or is likely to incite racial discrimination or social hatred will not be approved. All productions must be pre-approved by the Committee before filming starts.
Benefits allowed under the Scheme
Under the Scheme, successful applicants have access to either a Cash Rebate, or a Tax Credit, subject to the following conditions:
- Cannot account for more than 35% of the eligible expenditure in the Republic of Cyprus;
- Sum is payable after the completion of shooting and after an accounting check; and
- Companies facing financial difficulty are excluded from the scheme.
The minimum expenditure (insofar that it does not exceed 50% of the total production budget) needs to be at least €200.000 in the case of feature films, €100.000 for TV drama series or self-contained drama films, €50.000 for documentaries for TV or cinema broadcast and €30,000 for other TV programs. Further, the production must promote Cypriot, European, or world culture through cultural test criteria. The maximum amount of aid for each production is €650.000 after an audited report is produced and submitted.
As an alternative to the Cash Rebate the scheme offers a reduction of the corporate tax liability of the company responsible for the implementation of a production:
- cannot account for more than 35% of the eligible expenditure in the Republic of Cyprus;
- minimum expenditure has to be 200,000 euro for feature films, 100,000 euro for TV drama series, 50,000 euro for cinematic or TV documentaries or 30,000 euro for any other TV programmes;
- sum to be deducted from taxable income shall not be over 50% of the Applicants' taxable income and shall be payable within the next five years subject to the above percentage restriction; and
- shall the company be voluntarily or involuntarily dissolved or liquidated, the tax credit automatically ceases to have any value in the legal assets of the legal person to which it was granted.
Tax deductions for investments in infrastructure and developments
Eligible applicants which have invested in filming studios, audiovisual processing premises, filming equipment etcetera shall be entitled to have the sum of their investment deducted from taxable income. The aid cannot exceed 20% of the eligible expenditure for small enterprises and 10% for middle sized enterprises. The investment must remain in the Republic of Cyprus for a period of at least five years. The sum to be repaid will be deducted from gross income, and shall be carried forward and granted during the next five years.
VAT return on expenditure from Third Countries
Eligible applicants will be entitled to the return of VAT on expenditure, as examined by the Committee. The entire state aid, in any combination of the above incentives, cannot exceed 50% of the total production budget. The financial incentives granted can be shares by co-producers by prior agreement or pro rata according to their participation in the budget of the production. The co-producers shall be jointly and separately liable with respect to their obligations under the Scheme.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.