The Council of Ministers of the Republic of Cyprus approved the Cyprus Film Scheme on 27 September 2017 (decision no. 1433/2017) with a view to put Cyprus on the map of filming destinations. Described by some as “a natural film studio”, Cyprus offers a number of incentives targeting the international filming industry. Interested producers can visit the scheme’s website which promotes the scheme and acts as an application portal.
The Scheme provides for the following:
- Assessment Committee
The scheme specifies the set-up of an Assessment Committee which will be responsible for the implementation of the Cyprus Film Scheme. The Committee is constituted by a representative from (1) the Ministry of Education and Culture (2) the Ministry of Finance (3) the Cyprus Investment Promotion Agency and (4) the Cyprus Tourism Organisation. Its main duties are:
- determine the relevant requirements and pre-requisites
- the assessment of applications under the Scheme
- the approval of aid amounts and/or deductions
- the issuance of pre-approval and final approval certificates
Proposals are assessed based on the economic and/or cultural benefits for the Republic of Cyprus.
- Online Platform
The launch of the online platform where interested producers can apply for the Scheme. To be able to apply individuals must first sign-up for an account and have at least the following information available:
- A registered company in Cyprus, or another EU territory
- A financial plan of the project
- Proof of funds
- The scenario of the project
- CV's of the casting, director, producer etc.
Tip: Some of the key pieces of information required are the utilization of the Island locations and sceneries, how local resources will be used, what percentage of film time will showcase the island, and most importantly how the film will promote Cyprus.
The Cyprus Film Scheme provides a selection of incentives for film production companies by offering the filming industry the opportunity to shoot their films in an idyllic location and stunning landscapes. The Scheme has been allocated a maximum annual aid amount of €25,000,000.
- Main Provisions
The Scheme's benefits are based and calculated on Eligible Expenditures which are further specified as Above-the-Line and Below-the-Line. Their definitions are as follows:
Eligible Expenditure under the Cyprus Film Scheme include, amongst others, the following:
- Accommodation in the Republic of Cyprus
- Travel expenses (including flights)
- Equipment and grip rental
- Purchase of props
- Acquisition of land and buildings
- Construction and investment/interior design
- Transport and transport service vehicles
- Insurance and accounting services
- Per diem allowances
- Fees for location use licenses
- Post-production services (image and sound)
- Compensation for cast and crew
- Dispatch and transfer costs
- Arm’s length Pricing Principle
From the above, the following are considered Above-the-Line, everything else is considered Below-the-Line:
- Producer and producer team earnings;
- Director and director team earnings;
- Up to four 4 protagonist roles ;
- Scriptwriter earnings (provided that it is proven that the script was written in Cyprus);
- Casting director.
The maximum aid allowed per application is 40% Below-the-Line and 25% Above-the-Line. Above-the-Line cannot exceed 30% of the overall budget of the film.
The Scheme also specified a minimum expenditure in the Republic of Cyprus as follows:
- €200,000 in the case of feature films (long films)and producer team earnings;
- €100,000 for television drama series or self-contained drama films;
- €50,000 for documentaries for television or cinema broadcast; and
- €30,000 for other television programmes
It is noted that in any case of minimum expenditure in the Republic of Cyprus, the amounts should not exceed 50% of the total production budget.
Filming projects in Cyprus falling under the Scheme can enjoy the following benefits:
- Cash rebate
The minimum level of activity of the production within the Republic of Cyprus is set at 20% for each payment application against the budget’s total expenditures and the maximum level at 70% for each payment application. The aid amount is to be paid within 90 calendar days following the Applicant’s payment application and depending on the findings of the auditor's report.
- Tax Credit
The sum to be deducted from the taxable income shall not exceed 50% of the Applicant’s taxable income for the tax year within which the film production is made. The credit amount, if exceeds the percentage restriction, shall be carried forward and be paid within the next 5 years.
- Tax Deduction for Investments in Infrastructure and Equipment
Applicants investing in film production infrastructure and technological equipment such as filming studios, audiovisual processing premises, filming equipment, digital audiovisual means, etc., shall be entitled to have the sum of their investment deducted from their taxable income. The tax deduction is available for small and medium-sized enterprises and is capped at 20% on eligible expenditure in the case of small enterprises and 10% in the case of medium-sized enterprises. In case the investment relates to equipment, the equipment must remain within the Republic of Cyprus for a period of at least 5 years. If the deduction amount exceeds the limitations of the scheme it shall be carried forward and be granted during the next 5 years.
- VAT return on qualifying production expenditures for third countries
Value Added Tax rates in the Republic of Cyprus are 19%, 9% and 5% on all products and taxable imports. The Applicant is entitled to VAT return in relation to any expenditure, as every natural or legal person in a Member State of the EU has, in accordance with the European Directives. With respect to natural or legal persons from third countries that transact with the Applicant, such persons are not entitled to VAT return except in the cases of persons from Israel, Norway and Switzerland, countries with which the Republic of Cyprus has already signed interstate agreements. VAT returns arise within 6 months with respect to the legal person who carries out the foreign filming production in Cyprus from the end of the last deadline for submitting the VAT declaration for the specific VAT period during which the expenditure occurred or from the date on which the application for VAT return is filed.
NOTE: The total aid received under the Scheme for Cash Rebate, Tax Credit and Tax Deduction must not exceed 50% of the total production budget or 60% for a coproduction.
- Qualifying Film Categories
Within the framework of the Scheme, a film is considered a “compliant production” if it falls within the following production parameters:
- Cinematograph Films – Long Films
Including those direct-to-video, where the project is a film commonly screened as the main attraction for the public in commercial cinemas with a duration of at least 60 minutes or, in the case of a large format (IMAX) film, of at least 60 minutes. It also includes films that are fully or partially produced with Computer Generated Images (CGI) or with a combination of the above.
- Television film
As a drama (i.e. a composition which tells a story through the development of theme and plot, dialogue and action, portrayal of characters, settings of the play and the projection of relevant life situations) of a form like the characteristics of a long film capable of being broadcast on television. The television movie is not less than one commercial television hour in length, or, in the case of a programme that predominantly uses analogue or digital animation technology and/or stop-motion animation, not less than half a commercial television hour and is shot and processed to commercial release standards, for cinema exhibition or international television broadcast.
- Television series or mini-series
It consists of an episodic television drama, including animation, which is either an extended but self-contained drama made for television, incorporates the main dramatic elements of the character, theme and plot that are developed and concluded so as to form a narrative structure (similar to that of a novel) and which features a major continuous plot enhanced by minor plots and there is the expectation of an ending that resolves the tensions of the major plot and is arranged into consecutive episodes for screening purposes, or constitutes an anthology of drama works for television where the main dramatic elements of the characters, theme and plot are introduced, developed and concluded so as to form a narrative structure within each episode (similar to that of a novel or short story), but there is no continuity of plot between the episodes (although they may include common elements of the central idea and theme in each episode) and is shot and processed to commercial release standards for international television broadcast. The number of episodes for the television series or mini-series shall not exceed 15 episodes per year or six hundred minutes per year.
- Digital and/or analogue animation
Full feature and television animation for international distribution produced whether on digital or otherwise, but excluding computer games.
- Creative documentary
Where the project is based on an original theme that contains a specific “timeless” element so that there is no loss of interest when the event with which it may be linked has passed and contains significant original filming and is not limited to the reporting of information through pure reportage.
- Reality programmes that directly or indirectly promote the Republic of Cyprus and its culture.
Films that promote the beauty and culture of the Republic of Cyprus simultaneously with examining the way of life of people under specific circumstances which do not reduce the personality of the people participating, do not insult the customs and culture of Cyprus and are consistent with the general framework of this Scheme, are likely to be permitted by the Competent Authority.
The following are not eligible under the Scheme:
- Any public or special performance(s) organized for filming or other purposes;
- Any sporting event;
- Television game shows other than reality programmes;
- Current affairs programmes or talk shows;
- Educational Programmes presenting/explaining hobbies, projects, etc.;
- Review, Magazine-style or lifestyle programmes
Cyprus offers unique sceneries with only a short drive separating the blues of the sea, the steep mountains and picturesque villages spread throughout the island. Cyprus also provides an ideal location for uninterrupted filming as it offers more than 300 sunny days per year.
Last but not least, its location between Europe, Asia and Africa can be exploited by film producers seeking to shoot their films in various locations, countries and continents.
We help you with
Here in CX Financia we can guide you through the Cyprus Film Scheme application process and provide advice on structuring your film production enterprise in Cyprus.
Our services include, amongst others:
- Liaising with the competent authority during the application and assessment process
- Monitoring the status of the application and follow up, including personal meetings were deemed necessary
- Identifying the documents and information required by the competent authority for the application
- Incorporating a Cyprus company (or structuring a group of companies) for the purposes of carrying out and managing the production of the film
- Administrative services and tax services in relation to the Cyprus corporate entity
- Bookkeeping and accounting services
- Advising on financing options
- Assist with bank accounts opening at local banks
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