Global Tax Incentives for Film and TV Production
Tax incentives aimed at boosting film and television production are currently available in roughly 40 nations, allowing for rebates of up to 40% on what are often very costly projects. This shift is drawing the industry away from its traditional hub in Los Angeles to various parts of the world. However, there’s a caveat—a cultural test.
This cultural assessment, evaluated by a country’s film office, seeks to gauge whether a production has a meaningful connection to that country in order to qualify for tax rebates. In doing so, it also highlights what aspects countries value most in attracting entertainment ventures.
For instance, the UK offers a 25.5% rebate for high-budget films and TV shows, while productions costing less than $31.5 million can get around 40%. The test comprises four categories: Content, Contributions, Hubs, and Practitioners. A total of 35 points can be earned, but securing 18 points is essential for production eligibility.
Interestingly, only two of the categories are directly related to the UK. The ‘Contribution’ category requires a clear link to British heritage, while ‘Hub’ pertains to the portion of production or post-production conducted within the UK. Points under ‘Content’—which assesses elements like character nationality and settings—and ‘Practitioner’ points, which relate to the nationalities of the cast and crew, can be earned through representatives from the UK or other European Economic Area (EEA) countries.
“It’s not just about where things are filmed or what activities take place; it’s about who’s involved and what we are showcasing,” explains Lloyd Gunton, vice president at Entertainment Partners, an organization that focuses on production finances.
Gunton further notes that even productions with weak ties to Britain can score points, mentioning that a purely American version of Hamlet—set in the U.S. but with visual effects and post-production done in the UK, a British director, and a British lead actor—might still qualify under this framework.
Many other European nations also have similar cultural testing frameworks. Hungary, for example, has developed as a significant international production hub over the last decade, offering a 30% rebate, which is split between cultural content and production conditions. There are 32 potential points, with 24 corresponding to the latter.
“While cultural content is important, working with our local experts is even more crucial,” acknowledges Chava Kael, president of Hungary’s National Film Institute, adding that most films usually qualify through the Production Conditions category.
Cast and crew members from Hungary or other EEA countries, as well as internationally recognized filmmakers, earn points. Canadian director Denis Villeneuve, for instance, shot Dune in Hungary and qualifies under this rule due to his prestigious awards from festivals like Toronto and Cannes.
While major productions like “Dune” and “Poor Things” have significantly contributed to Hungary’s film industry growth—now employing around 20,000 people—Kjell, also from the National Film Institute, values smaller films that tell local stories, such as “The Brutalist,” which focuses on Hungarian immigrants. “The history of Hungary and Central Europe is incredibly fascinating and often overlooked,” he points out.
Meanwhile, Australia has its own approach, balancing the promotion of local narratives with substantial economic benefits through two incentive programs. The Location Offset Program offers a 30% rebate, mainly targeting large international productions, based solely on their spending on local goods and services. In contrast, a 40% rebate is available through a producer offset that uses a cultural test. “This test essentially focuses on Australian storytelling and whether local intellectual property rights are incorporated and whether we see Australian creative leadership,” explains Leanna Dubois, managing director of Entertainment Partners for Australia and New Zealand.
Dubois describes the cultural test process in Australia as a thorough review of production conditions rather than a points-based system.
According to the Australian Government, economic growth and cultural enrichment go hand in hand; hence, they see value in the overseas investments and skills training that these productions foster. In a recent statement, a spokesperson for the Department of Infrastructure and the Arts noted that new legislation requiring streaming services with over a million subscribers to invest 10% of their total national expenses in local content is set to take effect in 2025.
“There are still elements that need to come together, but I remain hopeful that global streaming platforms will engage with the diverse audiences in Australia,” Dubois adds.
The overarching aim of these cultural tests is to leverage significant tax incentives against the broad international reach and economic benefits that film productions can offer. For example, in Thailand, beyond a base 15% rebate, an additional 5% can be earned for complying with cultural mandates—like hiring locals in key roles or projecting a positive image of the country. Productions that pass this cultural scrutiny can access larger rebates, as evidenced by Season 3 of “White Lotus,” which not only showcased Thailand’s beauty but also made a considerable economic impact.
The concept of “soft power” encapsulates the essence of cultural testing—it serves both as an economic qualifier and as a means to enhance cultural influence on a global scale. Ultimately, whether the focus is on enriching local economies or promoting artistic endeavors, the end goal remains the same: augmenting each country’s cultural impact.
