With 360 days of sunshine and a unique blend of landscapes, Cyprus stands out as a prime filming location in the Eastern Mediterranean. Strategically located at the crossroads of three continents, the island offers a natural studio for filmmakers.
The Cyprus Film Scheme, established under EU Regulation 651/2014, promotes the local film industry through financial and tax incentives. It aims to position Cyprus as a top destination for audiovisual works and attract international investments.
The scheme is set to be available until 31 December 2026, the scheme offers a range of incentives, including cash rebates, tax credits, and tax deductions for eligible film productions. However, there will be an extension given for six months and it is expected to be renewed for another 3 years.
A. Overview of Incentives
The scheme offers several types of financial support, including cash rebates, tax credits, and deductions for investments in film infrastructure and equipment. These incentives are designed to attract both European and international filmmakers and production companies to Cyprus.
1. Cash Rebate
The cash rebate option provides direct financial assistance to production companies. Based on the eligible expenditure incurred within Cyprus, filmmakers can receive up to 45% of “Below the Line” costs and 25% of “Above the Line” costs. This makes Cyprus one of the most attractive destinations in Europe in terms of cash rebates for film production. To qualify for the maximum €7.5 million cash rebate, feature films must have a minimum spend of €200,000, while other audiovisual productions must spend at least €80,000. Additionally, 20% of the production budget must be used within Cyprus.
Once a production is completed, the rebate is processed within 90 days following a full audit of the submitted expenditures, provided they meet the cultural and economic criteria outlined in the scheme.
2. Tax Credit
The tax credit incentive offers another path for production companies to reduce their corporate tax liability. Under this option, filmmakers can deduct up to 35% of their eligible production expenses from their taxable income. However, this deduction is capped at 50% of the company’s total taxable income for the year in which the production occurs, with any unused credits eligible for carry-forward over the following five years.
Similar to the cash rebate, to qualify, productions must meet the minimum expenditure thresholds and promote European, Cypriot, or global culture, as determined by cultural criteria set out in the application guidelines.
Note: The Cash Rebate and Tax Credit incentives cannot be claimed simultaneously; productions must choose between one or the other.
3. Tax Deduction for Investments in Infrastructure and Equipment
This incentive focuses on long-term investments in Cyprus’s film industry infrastructure. Eligible expenses related to filming infrastructure, such as studios, audiovisual processing facilities, and specialized equipment, can be deducted from the company’s taxable income. Small enterprises can deduct up to 20% of their investments, while medium-sized enterprises are eligible for up to 10%. These investments must remain within Cyprus for a period of at least five years, ensuring lasting benefits for the local economy.
B. Eligibility and Application Process
To participate in the Cyprus Film Scheme, applicants must submit a thorough proposal, including a registered Cyprus or EU company, a financial plan, proof of funds, and detailed resumes of key production staff such as the director, producer, and cast members. Additionally, the project must meet specific cultural criteria, promoting Cypriot, European, or global culture.
The approval timeline for applications is approximately two months.
C. Projected Costs
While the Cyprus Film Scheme offers generous financial incentives, there are associated costs from the Cypriot side that applicants must consider. Estimated fees for services, VAT, and disbursements should be factored into production budgets. Professional advice is recommended to ensure accurate planning and compliance with Cypriot and EU regulations.
How can Aspen Trust Group help?
As a boutique corporate service provider in Cyprus, the Aspen Trust Group combines its industry expertise, local network, and specialized knowledge to offer a comprehensive, integrated approach to film production companies considering Cyprus as a filming destination.
We offer a comprehensive range of services, including:
- Providing advisory support for your production company regarding the Cyprus Filming Scheme
- Handling communication with relevant authorities during the application and approval stages
- Tracking the application process and providing regular updates
- Assisting in compiling and submitting the required documents to the authorities
- Setting up a Cyprus company (or group structure) to manage the film production
- Delivering administrative and tax solutions for your Cyprus entity
- Offering accounting, bookkeeping and financial reporting services
- Facilitating the opening of local bank accounts
In addition to these services, we specialize in film production accounting, ensuring that all financial aspects are carefully managed. Contact our expert team today to discover how we can support your production journey.