EXCLUSIVE: Under the newly-reformed Italian film and TV tax credit, big American productions like The White Lotus may have thought twice before setting up in the European nation.
Deadline can reveal that the new credit will come with an €18M ($19.7M) cap on payouts for international shows and movies. International productions will be eligible for at least a 30% rebate on qualifying spend, which is below the standard 40%. The move is designed to tip the scales back to local Italian TV and movies, a driving force behind the Giorgia Meloni government’s decision to reform the credit.
Under the previous credit, no such cap existed, but Meloni’s culture ministry has of late spoken of a waste of government resources amid ballooning budgets. The cap means the maximum a big international project could take from the government is €18M. There will also be a cap for local productions of €9M, which should prove less of an issue as budgets will be far lower on these projects. Eligibility criteria more broadly has been tightened.
Deadline is told that the new draft credit has now been shared with producers, unions and banks, and that banks have started issuing loans for new projects on the understanding that the credit will be passed into law in its current form.
“Big American productions maybe won’t come now,” said a producer source from the Italian film and TV industry. “They may spend whatever is needed to reach the cap but it won’t be like it was before. So in a way it is not great news but then it could be good news for local production.”
The source added that the previous rebate had “created a bubble,” which had seen crew prices inflated to almost impossible-to-reach levels for local producers.
The past 12 months has been one of stalemate in the Italian industry. Many Italian productions had stopped shooting while they waited to see the level of tax credit they could attract after the culture ministry said the credits required reform. The issue has been impacting both local productions and also international projects looking to shoot in Italy, which had been handed a boon by the success of HBO’s The White Lotus – filmed in Sicily. Many had raised concerns that projects were being relocated en masse to neighboring Spain, which is more welcoming of international projects.
“Primary distributor”
‘Parthenope’: May not have benefited from reformed tax credit funding due to new rules around distributors.
Photo by Gianni Fiorito
Notably, another feature of the new credit, we are told, is tighter rules around movie distributors in order to pave the way for lengthier theatrical runs.
Projects will have to be attached to a “primary distribution company” in order to obtain the credit, with some sellers not recognized under the rules. The idea is to only hand out funding for movies that will be given longer theatrical runs with an established distributor in order to avoid movies being given just a few days in a small number of theaters before moving to streaming services. This part of the credit has previously been teased in less detail by the ministry.
The likes of new Italian outfit PiperFilm, which launched several weeks back with a Netflix deal and the Italian rights for Paolo Sorrentino’s Parthenope, could be ineligible for the credit, according to our producer source.
The credit is now close to coming into law, we are told, and is one of a number across multiple industries that has been reformed by the Meloni government.
The situation and its detrimental impact on the sector was the talk of June’s AVPSummit in south Italy, during which Nicola Borrelli, the General Director of Cinema and Audiovisual at the Italian Ministry of Culture, sought to reassure by explaining that plans for revisions to the credit had been submitted and it would soon be up and running with “a few tweaks.” The cap has proved to be the focal point of those tweaks and will likely to be the talk of the industry over the coming weeks.
“We have decided to apply the changes not because we want to reduce the amount of money but because we want to avoid the waste of useful resources,” Borelli said at the AVPSummit.
This came after Italian film and TV orgs held an emergency press conference in Rome to discuss the damage being done to their sectors by the uncertainty. The meeting gathered the members of 14 professional bodies including filmmakers’ org 100 Autori, producer groups Anica and AGICI, Cartoon Italia and the actors’ association Unita. The Italian industry has had tax credits in some form since 2008.