RSM Film and Movie
The services of our Film & Movie business line cover a full spectrum of tax consulting, accounting, legal consulting and administrative tasks relating to the complex process of movie making - production planning and setting up of the production office, the financing background, foreign and local film crew members, the employment of actors, production preparation, filming and post-production work.
It is not only Hungary's filming expert staff and infrastructure that attracts international film productions but also the country's successfully launched indirect film tax rebate scheme the rate of which increased to 30 percent in June 2018 making the possibility of filming in Hungary even more favourable for film productions whether it is international or domestic. The higher rate of film tax rebate will certainly remain in place until 31 December 2024 giving the Hungarian film industry a good chance for keeping its market-leading position in the increasingly sharp European and regional competition.
The 30 percent normative state film tax rebate available in the form of a tax refund can be applied for the making of Hungarian, foreign or co-production films in the case of which at least 80% of the direct production cost, i.e. production budget arises directly in Hungary. In case of film tax rebates not reaching the 80 percent Hungarian spend ratio, the amount equivalent to 25 percent of the Hungarian cost of non-Hungarian spend is also eligible for a 30 percent tax rebate. Strict registration, cost accounting, and administration requirements have to be fulfilled in order to apply for the indirect film tax rebate. An application meeting statutory requirements have to be filed for which a thorough knowledge of facts relevant for tax purposes is essential.
Our complex advisory service designed for the special characteristics of the filming industry guarantees high-level service for our partners built on the knowledge of Hungary's regulatory background and on the needs of individuals, experts and companies concerned by film production (production offices, film distributors, film studios, producers, financers, actors and crew members). It does not matter if it is an independent film production or the production of a film or series of a large film studio or a dynamically growing media service provider, the Hungarian filming industry is capable of fulfilling tasks cost-efficiently with the appropriate administration provided by our competent tax, accounting, and legal experts.
Full-scope of services from RSM Film & Movie business line:
General filming advisory on the Hungarian indirect film rebate scheme
The service of our Film & Movie business line covers both consulting on the tax rebate or tax credit available to Hungarian corporate income taxpayers who wish to support filmmaking and the optimization and accounting of their tax and cash flow plans.
Film financing advisory, planning of film rebate and film financing, preparation of comfort letters
The expected rate of state rebate should already be taken into account at the time of planning the film production financing so that financers (investors) only have to be found for the part of the production budget that is not covered by the rebate. After the necessary due diligence, our experts prepare the comfort letter playing an important role in determining the film rebate in which the expected amount of the film rebate is declared based on the planned production budget and other available information. We wish to help film productions in setting up the optimal financing structure and in determining the expected amount of film rebate.
For the film productions intending to apply for film rebate, our tax consultants examine each cost element of the project, the planned budget and check the basis and amount of the indirect rebate. We determine whether domestic and foreign costs can be accounted for and the amount of the relating film rebate after which we can issue the comfort letter relating to the planned film budget. We also examine the potential loan transactions and loans contracts relating to film financing from a legal and tax perspective and perform tax planning for financers.
Administration of foreign actors and crew members, preliminary status review, rebate planning, tax administration
50 percent of the remuneration of foreign actors and crew members participating in films produced in Hungary but not paid by the Hungarian production also qualifies as Hungarian spend under the normative state rebate scheme provided that the income in question is taxable in Hungary and all other conditions are fulfilled. Strict and accurate administration requirements apply, however.
In order for the filmmakers to be able to obtain the total film rebate available in relation to foreign actors and crew members, our consultants take care of tax return preparations, determine tax residence, perform status review, obtain work permits, carry out social security and tax ID administration and prepare and file the necessary documents with the Film Office.
Comprehensive accounting service for the whole duration of film production
We provide comprehensive accounting service throughout the film production process (preparation, production and post-production works) for the Hungarian production company with a paper-free, cloud-based document management solution. We administer production related invoicing, prepare financial calculations and analytical records, prepare and file returns in all tax types concerning the Hungarian production company.
Through the accounting of the Hungarian production company, we also ensure the gathering of accountable costs (Hungarian and foreign spend) for film rebate purposes and their presentation in an appropriate form.
We provide comprehensive production accounting service to production companies, film studios and foreign and Hungarian investors involved in filmmaking. We take care of film production accounting based on the budget and bookkeeping prepared by the filmmaker on the platform specified by our partner (Vista, Moneypenny, GreenSlate, etc.) and operate a management information system using digital PO if requested.
We prepare the reports and statements agreed with the filmmaker in compliance with the requirements relating to the indirect state tax rebate and the financing plans and we also provide these to the Hungarian National Film Office and cooperate personally in administration and reconciliation processes. Our experience covers US, English, French, Canadian and German productions and co-productions also.
Bridge financing and loan agreement administration for film productions
We cooperate in the preparation and administration of the bank loan transactions of film productions and/or filmmakers by preparing the statements on production costs for the involved financing banks.
Contact Film Office, representation of the film production
Our company keeps contact with the National Film Office and takes care of administrative tasks throughout the production process including the classification of the production, its registration, administration of the processes relating to cost control and the issuing of the film subsidy certificate. We prepare the reports necessary for the cost audits conducted by the National Film Office based on bookkeeping data and in line with the schedule set for the film project in question. We elaborate the accounting processes necessary for the monitoring of the organization responsible for the filmmaker's accounting and for cost control.
Payroll and administration of K-benefits
We carry out full-scope payroll tasks and the administration of K-benefits in respect of domestic crew members and contributors. We ensure the administration necessary for the fulfillment of tax advance payment obligation relating to foreign actors and crew members paid by the Hungarian production company: calculation, declaration, and payment of personal income tax and contributions.
Other legal and tax services as part of contract planning and review
We provide comprehensive legal service for the film production and the project including project company set-up, registered office service, company registration and the elaboration of contract structures. Our legal services including contract planning and review, for the preproduction, shoot, postproduction phases
Reviewing the contractual relationships of the film productions carried out in Hungary is essential for both taking full advantage of the available rebate scheme and for accurately determining the tax status of foreign actors and crew members or companies. In many cases, the employment, corporate law, and general civil law contracts concluded under foreign law do not comply with Hungarian tax and accounting requirements, which may generate a tax risk. To avoid this, we make recommendations as to the proper contract form and prepare the relevant documentation.
Tax representation of the production and private person crew members
As part of our tax authority audit-related representation service, we provide comprehensive representation in front of the competent authorities for both film production companies and individuals. Our experienced expert team supports tax interests of foreign clients efficiently through the interpretation of Hungarian procedural rules. We also could provide in-court representation for both the production and private individuals.