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Tax incentives boost film & TV production, study shows

MI5A new study by the European Audiovisual Observatory says fiscal incentives, such as tax shelters, rebates or tax credits, are found to boost the film and TV production industries.

The report by the Observatory concludes that countries with incentives in place have a relatively larger film sector than countries which offer producers nothing.

The study, released on 6 February, also shows that an immediate impact of the introduction of a fiscal incentive in most countries is an increase in production levels to a point where full capacity is reached (as for example in the UK). Increasing the size of the production industry by training new people and expanding services is an economic benefit that can be enjoyed as a result of tax incentives.

However, the opposite is true as well and countries should be aware that if their film and/or TV industry reaches full capacity, this can significantly up the cost of production. Therefore, if a country is to introduce a new tax incentive, it should also look at ways to increase the level of crew and enhance the general infrastructure for filming.

Overall, the European Audiovisual Observatory finds that both the growth of the average production spend as well as the increase in employment, are larger in territories that have incentives than those that don't.

Between 2010 and 2014, European countries introduced 12 new fiscal incentive schemes to support film and television production. This brings the total of tax schemes as of 31 December 2014 to no fewer than 26, spread over 17 countries in Europe.

Concerns that the introduction of incentives by a country or region diminishes the otherwise available funding (such as from regional film funds), are thought to be unfounded.  The Observatory writes in its report: "There is little evidence of this actually happening. In general, fiscal incentives fit well alongside other support initiatives and in most countries do not have the effect of reducing or inhibiting other funding sources."