Film tax incentives in Cyprus

“Action” on Film Tax Incentives in Cyprus

A variety of film tax incentives has developed around the world to encourage the production of films and the expression of local stories. Although the film industry has been long established in places like Hollywood or Bollywood, global destinations provide the potential for new and interesting locations in movie production.

Film tax incentives can be seen in a variety of formats and benefits for qualifying productions. The Aspen Trust Group examines the various advantages of film tax incentives and the value of choosing to film in Cyprus.

The Development of Movie Production Incentives

The United States has dominated the movie production industry with its unprecedented historical expansion of Hollywood. By the 1990s, movies weren’t the only beloved film products. Television culture had captured the attention of a global audience.

As the entertainment industry continued to experience rapid growth, the American film industry wondered about the impacts of “runaway productions” – film productions for cinema and television that were intended for the American audience yet were filmed in cheaper global destinations.

Seeing the opportunities to capitalize on the expanding industry, Canada introduced the world’s first film tax incentives in 1995 and 1997, leading to a surge of productions crossing the border to film. Studies indicated that Canada had the vast majority (81%) of film productions outside the United States. 232 productions went to Canada just one year after the introduction of Canadian film tax incentives.

Following the example of Canada, various U.S. states took the opportunity to establish their own incentives for film and television production. The first American state to introduce legislation for film tax incentives was Louisiana in 2001 and 2002, and by 2009, 44 other states had implemented film production incentives.

Yet, North America is not the only destination to find production incentives. A report by the consultants at Olsberg SPI highlighted the vast number of countries in 2020 offering production incentives globally, with approximately 100 incentives to consider.

Beyond Tax Incentives

Production advantages go beyond film tax incentives for production. Proponents of the measure lead to job creation, infrastructure and small business development, as well as increased revenue and tourism. Jurisdictions that offer production incentives gain positive byproducts and attract films that would have most likely gone elsewhere.

During the filming processes, the production cast and crew spend locally on hotel rooms, equipment rentals, and other basic necessities during their stay. They contribute to the overall local economy with large amounts of direct spending.

Moreover, as the filming process takes place, infrastructure and small businesses are further developed or new ones emerge to support the production. Training and experience lead to on-the-job training on the nuances of filmmaking and aids the foundation for the area’s experience for future productions.

Beyond the basic revenue that comes with any large-scale production for its filming location, film tourism amplifies the regional investment by providing tourism marketing opportunities with fewer expenditures on the initial media marketing. Iconic locations become prime tourist destinations by movie fans and lead to greater filming interest in the future.

The Cyprus Filming Scheme

Aiming to attract international producers and filmmakers and unlock the unrealized potentials of Cyprus as a production hub, the Cypriot Government introduced a package of financial incentives in its 2018 Cyprus Filming Scheme.

Cyprus as a filming location has the potential to become a state-of-the-art production hub with its diversity in cultural and natural filming locations, from stunning cities to scenic mountains and top-rated beaches.

Production categories qualifying for these incentives include:

  • Feature Films, long films with a minimum duration of 1 hour or 45 minutes for IMAX
  • Television Films, Series, or Mini-Series
  • Creative Documentaries
  • Animated Films
  • Reality Programs that promote Cyprus

The Cyprus Investment Promotion Agency allows production companies to choose between cash rebates and tax credits, tax allowances for equipment and infrastructure investments, and VAT refunds on qualified income.

The Aspen Trust Group breaks down the myriad of film tax incentives in Cyprus for filmmakers scanning the world for the perfect shooting locations.

Film Tax Incentives in Cyprus

There are four ways international film productions can score big with the Cyprus Filming Scheme – cash rebates, tax credit, tax allowance, and VAT refunds.

Cash Rebates

Up to 40% rebate on eligible expenditures occurring in-country is granted, the highest in Europe. The minimum expenditure (insofar that it does not exceed 50% of the total production budget) needs to be at least:

  • 200,000 Euros in the case of feature films
  • 100,000 Euros for TV drama series or self-contained drama films
  • 50,000 Euros for documentaries for TV or cinema broadcast
  • 30,000 Euros 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 Euros after an audited report is produced and submitted.

Tax Credit

Under the same guidelines of cash rebates, production companies can receive a reduced corporate tax rate. The maximum aid shall represent 35% of eligible expenditures made in Cyprus. (minimum expenditure is the same as that under Cash Rebates).

The sum of the tax credit cannot be greater than 50% of the total taxable yearly income in which the production is made. The tax credit can be carried forward within the next five years as long as it does not exceed the 50% restriction.

VAT Refund

VAT refunds are granted for qualifying expenditures incurring in Cyprus and related to the implementation of the production.

Tax Allowance by Investment

Investment in filmmaking infrastructure and equipment by small and medium-sized enterprises can be eligible to deduct the investment from the taxable income. This includes premises, studies, and film equipment.

Cyprus Film tax incentives

The tax allowance aid cannot be greater than 20% of eligible expenditures for small enterprises and 10% for medium ones. The equipment must stay in Cyprus for at least 5 years to be eligible for the tax allowance.

​​Film Production Uninterrupted by Covid-19

Ranked 5th among countries for Covid-19 performance by the Lowy Institute, this adds an additional layer of benefits beyond film tax incentives in Cyprus. The jurisdiction has handled the pandemic well and as a result, allows economic and business activities to continue despite recent waves of the virus. For film production teams, uninterrupted and safe environments to operate ensures that lengthy production projects can be seen through to completion at a time when in-person filming endeavors may be difficult to manage.

Further, border and testing measures remain some of the most opportune in the world for foreign individuals looking to travel to and continue work within the jurisdiction. Many of the policies and preventative or treatment measures in Cyprus allow for industries to maintain normal functions, providing additional support to film production crews during the coordination and filming processes. For instance, Cyprus is ranked 2nd in Europe for virus testing and, through the GeSY National Healthcare System, early detection mechanisms unify the response through which residents and foreign nationals rely to continue daily business operations while promoting healthy standards of living.

At a time when global economies are still figuring out how to fully resume normal business and travel policies, production teams are finding advantages beyond just monetary film tax incentives in Cyprus, guaranteeing business as usual for projects.

IP Box Regime

Whether solely shooting a film or headquartering a film production company in the jurisdiction, Cyprus has one of the most progressive IP Box Regimes in the world. Not only is Cyprus compliant with all major international legal policies regarding intellectual property but also the jurisdiction boasts a leading nexus framework for the taxation of IP assets. Qualifying IP assets can effectively see a low rate of only 20% on IP income.

Film projects enjoy the film tax incentives of the Cyprus scheme as well as the highest level of protection according to IP policies. In addition, other aspects of film production may yield greater tax incentives through the Cyprus IP Box Regime protocols, furthering the financial solutions for film production units based in or interested in relocating to Cyprus.

Leading Service Sector for Film Production Support

The Aspen Trust Group is leading the way in support services for finances and film production under the guidance of visionary CEO Ms. Marina Zevedeou. The company received the title of “Leading Service Providers” by the Washington Times in regards to the international film productive incentives support, marking its legacy as a financial expert for film production companies operating in the jurisdiction.

Moreover, Ms. Zevedeou received this year’s Citywealth Gold Level ‘Woman of the Year’ Powerwomen Award for leadership of a financial organization. The quality of services brought to the financial service sector is at an all-time high, with the professionals and Ms. Zevedeou’s noteworthy contribution setting the standard for Europe.Film production companies eager to take advantage of the film tax incentives in Cyprus as well as gain insight into other tailor-made solutions for project success at a minimum cost will find the jurisdiction’s support service industry one of the best in the world. The Aspen Trust Group is ready to turn any project into a rewarding experience.

How Does Cyprus Compare?

Cyprus is an ideal location for a production besides just the film tax incentives. Already, demand has been high for the jurisdiction and the government is already considering lifting the annual cap to attract huge productions from the United States.

In comparison, Malta offers a 25 to 40% rebate but many rebates are awarded based on the percentage of Malta features within the film. The program also requires a screen credit.

In Ireland, there is a 32% tax credit on local expenditures but the production company must reside within Ireland or trade through an agency or branch.

Germany has significantly reduced its film funding over the years but they offer a grant that covers 20% of production costs in-country with limitations. However, the film must have an office in Germany, spend 25% of the production costs within the country, and have 75% of its financing in place, among other requirements.

New Zealand is known for its many filming locations, but the country only grants a 20% cash rebate on qualified expenditures and has several requirements, such as the 11 million USD minimum expenditure on a feature film.

Although the local film industry is still growing, Cyprus has a strong pool of talent and multilingual professionals with international experience. Further, English is universally spoken and helps limit barriers between international and local production crews that might present a challenge in other jurisdictions.

The Perfect Filming Landscape 

The island of Cyprus also has a rich range of historical and cultural landscapes for films exploring various historical periods. Its harmonious blend of tradition and modernity makes it a unique shooting location beyond film tax incentives. Its famously distinctive natural beauty, with pristine sandy beaches, picturesque mountains, valleys, and waterfalls, has already caught the attention of international film producers.

Key Destinations

As a crossroad of cultural and historical importance, Cyprus reflects both ancient and modern influential scenery for Europe, Asia, Africa, and the Middle East. There are lush fields and valleys as well as iconic mountain ranges such as the Troodos Mountains. As a Mediterranean country, Cyprus also has numerous pristine beaches, with many of them registered as Blue Flag beaches for their crystal-clear waters and clean sandy shores.

For film production sites looking for destinations of historical value, Cyprus is home to several World Heritage Sites such as Paphos and the famous Choirokoitia. These locations transport visitors back hundreds of years to the first civilizations of modern European cities. Additionally, there are many castles and churches dating back to the Byzantine or Gothic eras.

Yet, the Cyprus landscape also sets visitors into the future with luxurious cityscapes. The city of Limassol provides an urban setting for film production with a coastline of brand new skyscrapers and a top-tier marina featuring international yachts, upscale restaurants, and beautiful villas.

The weather is another key selling point for Cyprus. With over 300 days of sunshine per year, production can rely on the abundance of natural lighting and predictable climate to film year-round.

Production Support

These destinations are just a few of the fascinating locales that have attracted tourists to Cyprus for decades. In other words, Cyprus is the perfect location for filming projects with a wide range of set locations while also accommodating the needs of the production crew. At a time when relocating production teams to several international destinations for one project may be costly or logistically challenging, Cyprus is a jurisdiction that has a bit of everything that makes it simple to complete a filming project in one place without sacrificing the quality of the product.

Internal short distances and well-built infrastructure on the island allow for quick and easy movement of crew and equipment while safety is guaranteed as the country is one of the safest destinations in the world. Being at the crossroads of three continents, Europe, Africa, and Asia, its close proximity to diverse cultures and scenery is unparalleled.

Several films filmed in Cyprus have won awards at major film festivals. Cyprus has also attracted a major league movie with an estimated 25 million Euros of production costs starring Nicolas Cage. Finally, the Cyprus Film Commission has pre-approved two major Hollywood movies to be filmed in Cyprus just one year after the introduction of the new film tax incentives, putting Cyprus as the next major filming location.

The Aspen Trust Group assists film production companies to navigate these new film tax incentives and provides advice on the best financial options available in Cyprus for your film. Contact our consultants today to find out how your production can qualify under the scheme.

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