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The audiovisual industry expects more legal certainty

| News | Culture, Sports & Entertainment

Patricia Motilla and Mabel Klimt analyse the audiovisual industry and the improvements it needs with the changes at the top in the Ministry of Culture

Confilegal | Audiovisual production in our country is classified as high risk by many experts. For this reason, it is not surprising that, with the arrival of José Guirao, the Ministry of Culture and Sports, there are calls from different quarters for greater legal security for an emerging sector.

The success of an audiovisual production depends on many factors, amongst others, its economic coverage, which is why the combination of public aid and private financing provides the financial capacity to contribute to its success and must be consolidated in the future.

It starts with the production of short films and, depending on the success, we move on to feature films. The professionals who are dedicated to this are very vocational.

Patricia Motilla and Mabel Klimt, Andersen Tax & Legal's Culture, Sport and Entertainment partners took part in the firm's annual audiovisual forum, which focused on audiovisual production grants: public funding and private capital.

Also participating in this meeting were Munesh Melwani, Managing Partner of Cross Capital, Pedro Martín, Director of Audiovisual and Culture at Crea SGR, Gregorio Herrera, Area Director of Dunas Real Assets, and Ignacio Roig, CFO of Inverseguros, along with more than 80 representatives from the audiovisual sector.

During her speech, Mabel Klimt explained the new requirements for access to funding from the Institute of Cinematography and Audiovisual Arts (ICAA), both general and selective, and has indicated that it is expected that, following the change of government, the Order establishing the regulatory basis for the funding provided for in Chapter III of Law 55/2007, of 28 December, regarding Cinema, will continue to be processed until it is approved.

"The number of films in a country like ours is very much linked to the direct aid their producers receive. Currently there is a fund with about 30 million euros as an element of aid, with which not many films can be made. In addition, tax incentives are very useful for large and medium-sized projects. The value of our industry is important and transcends our borders. There's Juan Antonio Bayona directing the latest installment of Jurassic Park," says Klimt.

However, this fund is scarce in the face of the European reality.

"Germany has 150 million euros, Italy 400 million and France more than 600 million euros in its fund. As can be seen, the public aid scheme is not in the European average in our country. That's why the help of tax incentives is key to our industry and its survival.

It seems clear that the job of José Guirao, the new Minister of Culture and Sport, must be to improve this public aid fund and at the same time to sit down with the Minister of Finance and increase the percentage of tax deduction to the State aid limits set by Europe and our own country'.

Another issue that could be improved would be to "define the limit of this state aid, which is very vague. That the end of the depreciation aid be facilitated. The aim is to ensure that the previous model of aid management disappears definitively. Presumably it would end at the end of 2019, there can be no comprehensive reduction in it.

More legal certainty for producers

Klimt recalls the importance of legal certainty in a sector where "films have been in existence for two or three years, in which time two different rules have been passed and we are going for the third. It is necessary to have some predictability in the steps to follow so that the producer does not suffer so much in his work. In animation productions we're even five years away," he explains.

Other challenges for the new Minister of Culture include the challenge of the Intellectual Property Law and its adaptation to the new times, the definition of a Statute for the Artist that will take him away from his precariousness from clear rights. The book industry also has its demands to make, and there have been changes in the cultural heritage industry, the time has come to make a rule that recapitulates everything and is clearer than the current one.

For her part, Patricia Motilla referred to the Economic Interest Groupings (EIGs) as a structure for financing a film shoot and pointed out that it is a financial instrument that provides legal certainty to both investors and producers.

"It is a concession made by the General Directorate of Taxation at the tax level to transfer tax credits to private investment capital," she explains.

"The financing of any audiovisual project is based on four pillars. One, the distribution, the other the purchase of rights, the tax deductions that over the years are granted to the sector and direct public subsidies or aid from the ICAA of the cinema as well as at the regional level," says this lawyer.

According to this lawyer, according to the Community directives, it must be realised that State aid cannot exceed the cost of 50% of the total cost of the film, or 60% if it is a European co-production "perhaps the tax credits could be raised to 50% so that the film producer could choose between direct State aid; ICAA or regional aid or use indirect aid through private capital, or use a joint formula", she points out.

However, the big problem is the delay in public subsidies in reaching what these experts say is damaging to our infant industry "in recent years our producers have made a great effort and we really have to defend this emerging industry with very high expectations in our country".

Patricia Motilla reminds us that many films are always waiting for this help "when you already have the financing, the preparation of the film takes six months. But first you sign contracts with actors, distributors and televisions. These contracts establish a start and end date for filming with actors and technicians. If you don't get the help you were going to get, you have to cancel a lot of contracts, and that's what triggers the compensation.

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