RSM Film & Movie
The services of our Film & Movie business line cover a wide 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 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.
The following services are provided by the RSM Film & Movie business line:
General filming advisory on the Hungarian indirect film tax 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, film tax rebate planning, 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, status review, tax 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 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.
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.
Legal and tax services for film productions as part of contract planning and review
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 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. If necessary, we provide in-court representation for both the production and private individuals.