On September 2018, the scheme for the promotion of the film industry and the promotion of the Republic of Cyprus as an island for filming (the “Cyprus filming scheme”) was brought into force by the organization Invest Cyprus (the “CIPA”) with the creation of the online platform “Film in Cyprus”, through which interested filming companies can be informed and submit their application to participate to the Cyprus filming scheme which offers a number of inceptives to its participants. The implementing body for the Scheme is the Cyprus Film Commission (the “Committee”).
Who is entitled to apply?
Any entity which is registered in the Republic of Cyprus or any other member state of the European Union, provided that it carries out business in the Republic of Cyprus through a branch or office in Cyprus at least after the approval of the application and it carries the special purpose recognition initials “AVC” (Audio Visual Cyprus), can apply to participate and benefit form the Cyprus filming scheme.
To which productions it applies?
A qualifying film category may be feature films, television films, television series or mini-series, animation (digital or analogue), creative documentaries for theatrical or television release, transmedia and crossmedia productions and reality programs which directly or indirectly promote the Republic of Cyprus and its culture.
The Cyprus filming scheme provides to Cypriot and international producers with a package of incentives encouraging them to choose Cyprus as their next film destination. The incentives are cash rebate, tax credit, tax allowance for investment in infrastructure and equipment as well as return of VAT on expenditure.
It worth mentioning that with respect to the cash rebate and the tax credit, the production company must select which incentive it will take advantage of, given that they cannot both apply together. The cash rebate can apply together with the tax allowance for investment in infrastructure and equipment as well as together with the VAT return. The tax credit can apply together with the tax allowance for investment in infrastructure and equipment as well as together with the VAT return.
The producers may also have continued support by the CIPA in relation to the issue of licenses, the importation and exportation of equipment, the provision of information and instructions.
Production companies can be granted a cash rebate up to 35% on the eligible expenditures incurred in Cyprus. For a production to be eligible, the company must satisfy certain criteria which shall ensure that the aid promotes, among other, the Cypriot and/or European and/or world culture. There is also a condition of minimum expenditure occurred in the Republic of Cyprus, which sets different amounts of requested minimum expenditure depending on the type of the production. The cash rebate is given once the filming is complete and after the receipt of the audit report and its review by the Committee.
Tax credit (pending parliamentary approval)
As an alternative of cash rebate, production companies can be granted with tax credit which gives them a reduction of applicable corporate tax. The sum of the tax credit against the taxable income shall not exceed 50% of the company’s income for the tax year within the production was made. In case that the tax credit is not granted due to this restriction, the tax credit can be carried forward and can be granted within the next five years, subject to the said percentage restriction. The conditions of promotion of the Cypriot and/or European and/or world culture and of minimum expenditure which apply to cash rebate also apply in relation to tax credit.
Tax allowance for investment in infrastructure and equipment (pending parliamentary approval)
In case that a production company invests in film production infrastructure and technological equipment such as filming studios and filming equipment, it may be entitled to have the sum of its investment deducted from its taxable income. The tax allowance cannot exceed 20% of eligible expenditure in the case of small enterprises and 10% of eligible expenditure in the case of middle sized enterprises. In case of equipment, the equipment shall remain in the Republic of Cyprus for a period of at least 5 years.
Return of VAT on expenditure
Tax rates in the Republic of Cyprus are 19%, 9% and 5% on all products and services provided in the Republic of Cyprus and 19% and 5%, on all taxable imports. A natural or legal person from a third country may be entitled to a VAT refund in relation to qualifying expenditures of its production incurred in the Republic of Cyprus. It should be noted that VAT return arises within 6 months from the deadline date for submitting the VAT declaration for the VAT period during which the expenditures occurred or from the submission date of the application for return of VAT.
Any Expenditure incurred by the applicant in the Republic of Cyprus during the production of the audiovisual production may be an eligible expenditure. Expenditure may include accommodation costs, travel air costs, catering and food, equipment and grip rental etc. It does not include the cost arising from acquisition of land and buildings.
Production companies that opt to film in Cyprus will be able to choose between cash rebate or tax credit and can also benefit from tax discounts on investments made on equipment and infrastructure, and VAT returns on expenditure. These incentives in combination with the favorable conditions that Cyprus offers for filmmaking, including but not limited to the short distances in the island and its outstanding natural beauties of both sea and mountains, make Cyprus one of the best choices for filming. It’s about time for all film producers to take the above mentioned into due consideration and decide to make their next film in this beautiful island.
The content of the present article is intended to provide a general guide to the subject matter. For any questions, please contact Globalserve Consultants Ltd through our website or by sending us an email at email@example.com.
The Cyprus filming scheme can be found online by using the link https://film-investcyprus-org-cy.s3.amazonaws.com/Cyprus_Film_Scheme.pdf and the online platform “Film in Cyprus” can be accessed by using the link film.investcyprus.org.cy