Hungary Tax Rebate


Brief Presentation of the Hungarian Tax Relief

The film tax incentive
- Films (for cinema and television) produced in Hungary are eligible for a 25 % rebate based on their expenditure emerged in the country
- The incentive is available through local business companies who receive significant tax relief after their support of films
- The scheme is part of the film support programme approved by the European Commission in July 2008 for six years with a budget of EUR 231m

 kKc9XGnHungarian SpendNon-Hungarian SpendBasis of the taxrebate (max 125% of the Hungarian Spend)Tax rebate (25%)
Example 1 1,000 0 1,000 250
Example 2 800 200 1,000 250
Example 3 600 400 750 187,5
Example 4 200 800 250 62,5

Hungarian
National
Film Fund

 
What productions can benefit?
- Films of all genres made for cinema release
- Feature films, series, documentaries and animations made for televisions or other distribution platforms
- Porn and extreme violent films, commercials, reality shows and daily soap operas are excluded

Cultural test
- Films applying for the incentive have to be submitted to a cultural test
- Films must contain European content or cultural values and additional points are granted if EU nationals are either making or financing the movie (point system)
- 16 points has to be earned to pass

Registration of company and production
- Hungarian companies, registered with the National Film Office (NFO) are eligible to apply
- Foreign companies should conclude coproduction or service agreements with Hungarian registered company
- Production has to be registered at NFO
- Start of filming has to be reported to NFO

Who provides the financial support?
- Corporate-tax-paying domestic companies that may reduce their tax payable and tax base by the financial support they provide (double write-off) - 16% profit realized
- The financial support is provided in the form of a cash refund (post-financing)

Eligible expenses
- All the direct film production costs are eligible except those excluded by the film law; other costs are limited by the law (see below)
- The producer is free to spend 20% of the budget outside Hungary without suffering a reduction in the amount of the incentive. This means that not only the spend made to Hungarian taxpayers will qualify, but also some of the services provided by foreign taxpayers - up to 20% of the total production budget. (Consequently 25% of the Hungarian spend will be refunded)

Excluded or limited costs
- Part of copyright costs over 4% of the budget
- Travel costs are limited to trips from and to Hungary, stopover possible
- P&A is limited up to 2% of the budget (but max 5m HUF)
- Cost of services delivered by non-Hungarian sub-contractors limited up to 25% of eligible Hungarian spend.
- Producersʼ fee maximum up to 4%

How much is the incentive?
- Up to 20% of the eligible production expense (Hungarian or not-Hungarian)
- The non-Hungarian eligible spend is capped at 25% of the Hungarian eligible spend

Aid intensity provisions to take into account
- Total state subsidies shall not exceed 50% of the production budget, or
     -in case of co-productions 50% of the Hungarian contribution,
     -in case of low-budget films and films produced in Hungarian language the extent of subsidies is 90%,
     -in case of documentaries, animation, shorts, experimental films etc. - 100%

Other advantages
- Experienced crews
- Languages spoken
- Well equipped new studios – sound stages
- Variety of filming locations
- Post-production facilities and expertise

Is pre-financing possible?
- Certain banks are willing to pre-finance state subsidies and VAT
- Depending on the bank and the individual contract they keep a percentage from the 20% (meaning the actual rebate will be about 16%)
- Deal with NFO for monthly or quarterly accounting