Italian Film Industry’s Tax Credit Troubles

Back in 2009, the Italian government proposed to implement tax incentive cuts to the cinema industry under a new budget strategy to combat recession. As soon as the news came out, the Italian film industry threatened this new budget law with strikes and protests to protect the major tax credits that supported film productions. At the end, the issue was resolved after rigorous negotiation processes, and tax credits continued to be funded.

However, the Italian administration has just announced this year that tax credits for the entertainment industry will not be funded after the end of 2014. Instead of budgeting the tax credit for lower, the administration has decided to eliminate tax credits as a whole. This economic decision was made to help Italy reduce debt, and climb out of the European debt crisis. In fact, as of last year, Italy’s debt was 127% of the entire country’s GDP, making it the second highest debt-to-GDP country in Europe, right behind Greece. Due to this, the Italian government is making wide-range government spending cuts to various industries, including the cinema and television sector.

This decision clearly has implications not only on the Italian films, but also international movies co-filmed in Italy. Italy’s tax incentives have always ben a major attraction for production companies worldwide to film their productions in this country. The original tax credits not only provide up to $6.6 million dollars for every Italian cinema/TV as production costs; but it it also provide up to $4.6 million dollars for co-productions shot in Italy, making the country an idea place for many US films to be made. Just as a few examples, past US filmed that have been co-produced there include The Bank Job, The Tourist, Letters to Juliet, and The Godfather. The elimination of these tax credit will not only take away the appeal for foreign production companies to film in Italy, but it will also result in the fall of production as a whole. Major Italian films that require a high budget will no longer have the support they need, and the reduction of films being made can ultimately lead to an estimate of 2,500 job losses in the near future (including those of distributors and indirectly related positions).

Upon receiving Prime Minister Enrico Letta’s  statement on the tax credits elimination, many Italian film associations have responded vigorously to this change. Last Thursday, about thirty film associations- including ANICA, ANEC, AGIS, 100autori Writers’ Association and various unions, have released a statement that threatens to block the Venice Film Festival’s July 25th conference and all major events if the tax credits is not reinstated by then. They have asked the government to at least provide $118 million funding per year. Despite Letta’s efforts to reassure the industry that the government is committed to locate the tax credits from resources elsewhere after next year, these film associations are looking to be less lenient than they were in 2009.


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