The framework regulating financial aid for the cinema and audiovisual sector in Italy is the focus of a reform that will affect all the sources of funding, starting with tax credit which has significantly facilitated industrial growth. The intention is to strengthen the quality and cultural diversity of the works supported and boost their diffusion, especially internationally.

In the setting of the Venice Film Festival, the Italian Pavilion (the Cinecittà-MiC meeting space) is currently hosting a series of panels to explain what has changed and what has stayed the same in the system of ministerial incentives.

In a meeting on August 30th, the Undersecretary of Culture, Lucia Borgonzoni, and Director General of Cinema and Audiovisual, Nicola Borrelli, confirmed the general framework of the tax credit decree for attracting foreign investments outlined in the Legge Cinema (Cinema Law) and illustrated the key changes.

Lucia Borgonzoni described the international tax credit as “a measure that strengthens the image of Italy as a country capable of attracting foreign investors. In addition to the high professionalism of our workers and the extraordinary beauty of the locations that our territories offer, international companies will now also be able to count on this new tool to come and invest in Italy”.

Nicola Borrelli noted the effectiveness of the measure in attracting foreign investments: “The overall structure remains unchanged. We wanted to introduce some key innovations, in particular, regarding costs related to the use of artificial intelligence and the related provisions on transparency, and also compliance with the rules in the context of the collective agreements between associations and unions and that the rules against harassment in the workplace”.

DM International tax credit: provisions confirmed

• The recognized rate is equal to 40% of the production cost of the work spent on Italian territory; a 30% rate is provided for costs above the line relating to non-European subjects only.
• The tax credit has a maximum annual limit, for individual company or group of companies, of €20 M; there is no maximum limit per work.
• In any case, the national production tax credit, when used by the same company, is not included for the purposes of calculating the limit of €20 M per year.
• There is no modification to the other provisions relating to the eligible costs incurred on Italian territory.
• The transferability of the tax credit was confirmed.
• Also confirmed is the deadline of 180 days from the conclusion of the activities within which the definitive request must be submitted.

DM International tax credit: what’s new

• The costs of personnel and professional figures regulated by national collective labour agreements are eligible, for every employee, within the limits set out in the collective agreements stipulated by the most representative employers’ and trade unions’ associations increased up to a maximum of 20%.
• The requirement to include at least one day of filming/work on Italian territory has been eliminated (an innovation long-awaited by post-production companies).
• The benefit is granted on condition that the eligible cost is at least €250 K.
• There is now the possibility, in the presence of certain conditions, for the DGCA to remove the ban on executive production and post-production companies owning rights in the audiovisual work.
• Costs incurred in Italy relating to the use of artificial intelligence are considered ineligible, except for the use of artificial intelligence relative to special effects relating to the item “Main actors” (the provision concerns only the Italian executive producer).
• There is now an obligation to communicate the stages of the work carried out in Italy using artificial intelligence, in addition to the obligation to include specific clauses in the contracts between Italian executive production or post-production companies and writers, interpreters and performers of the work that permit their refusal to consent to the exploitation of their work/image/professional performance by artificial intelligence systems
• Applicants must operate in compliance with the protocol against harassment and violence in the workplace in the film and audiovisual sector signed by the largest employer and trade unions.
• Payment for the process costs is now required.