Big tax incentives for film production companies!
- Cash Rebate on eligible expenditure in Cyprus; OR
- Tax Exemption of income generated from the production;
- Tax allowance on investment in infrastructure and equipment;
- Return of VAT on expenditure
Who is entitled to apply for the scheme?
- persons in the private sector,
- carrying the special purpose recognition initials AVC (AudioVisual Cyprus) after their name,
- registered in the Republic of Cyprus, or in any other Member State of the European Union, provided that they carry on business in the Republic of Cyprus through a branch or office in the Republic of Cyprus at least after the approval of the application
- strictly restricted to one and only audiovisual project. The integration of more productions under the same Applicant (slate of films) is expressly prohibited, with the exception of a group production of a documentary for television or cinema under one single general title with a single budget, or a television series of no more than 15 episodes per year or six hundred minutes per year, with a single budge.
It is noted that there is no restriction regarding the percentage of foreign ownership participation in the Applicant
Qualifying film categories within the framework of the Scheme include the following:
- Cinematograph films – Long Films
- Television film
- Television series and mini series
- Digital or Analogue Animation
- Creative documentary
- Transmedia and Crossmedia productions
- Reality programs which directly or indirectly promote Cyprus and its culture
More specifically, the following are not eligible: any public or special performance organized for filming or other purpose, any sporting event, any television game show (not reality programmes), current affairs programmes, educational programmes presenting hobbies, projects etc, lifestyle programmes.
A closer look at the incentives:
- Cash Rebate
- Production companies can be granted a cash rebate of up to 35% on eligible expenditures incurred in Cyprus. In order to be eligible, the applicant must satisfy certain criteria, which shall ensure, amongst others, that the aid promotes the Cypriot and/or European and/or world culture.
- Tax Exemption
- Production companies can choose tax exemption as an alternative to cash rebates, offering a reduction of applicable corporate tax liability of the company. The maximum aid shall represent 35% of the eligible expenditure made in Cyprus. The sum to be deducted from the taxable income for the tax year within which the production is made, shall not exceed 50% of the applicant’s taxable income. The tax credit, to the extent that it is not granted due to the above percentage restriction, shall be carried forward and be given within the next five years, subject to the above percentage restriction. In order to be eligible, the applicant must satisfy certain criteria, which shall ensure, amongst others, that the aid promotes the Cypriot and/or European and/or world culture.
- Tax Deduction
- Individuals as well as medium-sized companies investing in film infrastructure and equipment (such as filming studios, audiovisual processing premises, filming equipment etc) are entitled to deduct the amount invested from their taxable income in the year of investment.The tax deduction cannot exceed 20% of the eligible expenses for individuals and small enterprises and 10% of the qualifying expenditures for medium-sized enterprises.In order to enjoy the deduction, the investment in equipment would need to remain in Cyprus at least for 5 years.
- VAT refund on qualifying production expenditures for third countries
- Companies and individuals from third countries incurring eligible expenses on film production, are entitled to a VAT refund in the same way as those from EU Member States in accordance with the relevant EU Directive. VAT returns arise within 6 months with respect to the legal person which carries out the foreign filming in Cyprus from the end of the last deadline for submitting the VAT declaration for the specific VAT period during which the expense occurred or from the date on which the application for VAT return is filed.
The Cyprus Film Committee
The Cyprus Film Committee is the responsible body for examining the applications. It currently consists of the following four members,
A representative of:
- The Ministry of Education and Culture (Senior officer)
- The Ministry of Finance (Senior officer)
- The Cyprus Investment Promotion Agency (Senior officer)
- The Cyprus Tourism Organisation (Senior officer)
1. Submission of Application
2. Temporary Approval Certificate
3. Review by Committee
4. Issuance of approval certificate within 60 business days from the expiration date of the period for submission of applications
5. Completion of Filming
6. Submission of certified auditor report
7. Issuance of Final Approval Certificate (FAC)
8. Bank transfer within 90 business days from the FAC date of issuance
For further information and details, please Contact us.