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Level of film rebate for Hungarian production increases to 30 percent

Following a green light from the EU Commission, the level of indirect film related tax rebate in Hungary rises to 30% from 11 June 2018. The boosted proportion of film incentive is guaranteed to 31 December 2024, thus in an ever-more competitive regional situation the Hungarian film industry has a much better chance of maintaining its role as market leader. No changes are expected in the application process for film grants.

Film incentives – to be used primarily for domestic expenses

The increased support can be applied for funding entitlement applications submitted on or after 11 June 2018. It is important to note that the 30 percent level refers to expenses spent in Hungary. At the same time, since the act on motion picture permits funding also for expenses not occurring in Hungary up to a level not exceeding a quarter of the accountable domestic costs, the effective level of support grows from the earlier 31.25 percent to 37.5 percent (100+25*0.3). 

Since the introduction of the corporation tax support system in 2004, the industry has been undergoing dynamic development. Besides the tax refund, Hungary’s favourable characteristics –price and wage levels, foreign exchange rate stability, the available film industry infrastructure, and the local qualified and experienced film crews – have also played an important part in this growth. The last time the level of tax rebate for Hungarian filmmaking increased (again by 5%, to 25%) was in 2014.

During an event organized by the Hungarian National Film Fund, it was shown that the operation of the film rebate system can demonstrably generate a profit, and in the short term as well. Aside from the increase in the tax revenue to tax refund ratio, more importantly, foreign productions shot in Hungary provide employment and create jobs for local specialists. According to their calculations, taken overall the multiplier effect of state funding on the economy is more than ten-fold. The attraction force of film funding is shown in the fact that revenues of the film industry in Hungary increased significantly, by more than 20 times, in the past 15 years, compared to the annual HUF 3 billion in 2004. 

The Hungarian film rebate system is a winner in regional competition as well 

Therefore it is no coincidence that neighbouring countries have also introduced their own national film funding systems similar to the Hungarian model, primarily targeting high budget foreign productions. Thus, for example, our greatest regional rival, the Czech Republic, is able to offer support amounting to 20%, but Romania can offer a 35% (expenses-based) grant, and these create increasingly tough competition on the Central European movie market. The hike to 30 percent in the level of film funding – together with developments implemented in the Hungarian film industry over the past few years (for example, the introduction of the deposit account system, the Film Industry Training Programme and the Filming Locations Office) – is expected to guarantee that Hungary will remain the favourite and number one location of choice for high budget foreign productions. 

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