There’s money to be saved in territories welcoming commercial film producers with tax and cash rebates. But commercial producer access to film incentives presents unique challenges. Despite the pressure of brands and agencies to seek more cost-effective solutions, the savvy producer is mindful of the nuances that shape an informed approach to each commercial project.
Creative Compromise
Incentives weigh heavily on the choice of locations for film and television projects. Commercial producers are wary of their carefully crafted campaigns suffering the same fate.
“Some agencies don’t even want to let the client know what regions have incentives because they don’t want that to thwart, you know, their project and where they go,” PSN Florida Partner, Mike Savitz explains. “They’ve already made up their mind.”
Corona took the lead to single out Puerto Rico as the location for a series of Seltzer commercials produced by US production company, Imperial Woodpecker. The beverage brand tapped into a 40% incentive facilitated by Savitz spearheading PSN film support on the island nation.
It is a move that is sometimes easier said than done.
“I’m pitching on a studio job with a celebrity footballer in Dubai. We can easily drive an hour down the road to Abu Dhabi to save 35%,” flags PSN UAE EP, Daniel Kilalea. “I suspect we won’t because you know what these footballers are like. But there’s no harm in making the producer aware of the incentive.”
Local Production Service Raises Awareness
The tax incentive accessed by PSN Serbia is a selling point that keeps clients coming back.
“When I see the budget is over the qualified spend of $150K, I make mention of it, and I put it in the budget,” says PSN Serbia Producer, Doloris Askovic. “People are not aware. I want them to see how much money can be saved.”
“I see people pitching in different countries and then I win the pitch because of tax incentives,” adds Askovic. “That’s why I mention it all the time. The savings brings them back.”
Jordan is betting on it. A recent boost to the country’s film incentive now includes a cash rebate for commercials starting at 25% so long as the project spends $250K in Jordan.
“We started offering incentives for films and television,” notes PSN Jordan Partner, Johnny Dabeet. “Studies have shown it develops our skills base, and there’s a trickle down effect for the economy on most any type of project so Jordan has gone all in.”
But there is no sure thing, even with a proof of concept like the Hannaford “In The Bag” campaign filmed in Boston, USA.
“We basically white-labeled an in-house production, and we used the tax incentive in the back of our minds to write a very aggressive budget to win the work and hit the number that made everybody feel comfortable,” explains PSN USA East-West Partner, Eric Brown. “Boston gives you anywhere America or a sort of European look with a straightforward tax credit. It’s something I’ve been selling ever since. But nobody else has bought it yet.”
Beating Back Bureaucracy
Brown floated the incentive windfall for Hannaford to counter the inevitable delays his client would face before cashing in.
“That’s a factor! Advertising is so fast,” acknowledges PSN Uruguay Partner and EP, Andrés Mailhos. “The paperwork and bureaucracy can take three to six months sometimes. The timeline [for approval and payback] is beyond our control. But who doesn’t want to get up to $100K back?”
On the front end, producers may be working to a calendar that moves faster than local authorities can approve an incentive. That’s a competitive advantage in Abu Dhabi. “You can get a sort of interim certificate of approval from the film commission. We’re blessed here because they know how the industry works,” notes Kilalea in UAE.
He cautions that application fees and audits represent additional up front costs. “People are pretty accepting of the $5,000 or so required to get the job done. It’s not a phenomenal cost when you’re getting 35% back.”
The Qualifiers
Cash and tax rebates are made on a set percentage of qualified expenditures. Producers work closely with our service company Partners to ensure compliance on individual line items in order to contain expectations.
“We are very close to Buenos Aires and its huge talent pool. We frequently cast Argentinian models and actors,” says Mailhos, citing a common exception in Uruguay. “Those people are not eligible. Those are costs outside Uruguay that don’t qualify for the cash rebate.”
There is a minimum local expenditure in each territory that will qualify a commercial for a country or state incentive. Amounts as high as $1.4M in Thailand or as low as $134,000 in Colombia are determined by legislators balancing a number of local interests that can shift over time.
Panama sits at a middle ground where minimum local spend to qualify is $500,000. That’s the same amount chosen by a number of individual counties of Florida trying to win back runaway production from the neighboring state of Georgia. Savitz hasn’t seen the Florida incentives impact the flow of boards back into the Sunshine State. “There just aren’t many commercials that spend more than $500K locally.”
Colombia lowered the bar of entry to find the sweet spot. “They have reduced the minimum expenditure for commercials twice,” says PSN Colombia Partner and EP, Juan Pablo Bernal. “The film incentive has been wildly successful for film and television producers. And that has helped the advertising world to at least notice Colombia’s production hub.”
The scripted television boom raised the bar in film hubs like Serbia. “The incentive made us a popular choice for Hollywood from 10 years ago. Now our crews on commercials are, you know, A-level.”
“The local team were excellent,” confirms Central Athens EP, Andreas Tsilifonis. “Of course, the incentive helped, but the main factor is always where we find the best location options.”
Few But Varied Territories Lure Commercial Projects
More than 50 countries (and 35+ U.S. States) offer incentives to the producers of film and television. So why do only a handful extend the red carpet to commercial producers?
Elected politicians don’t want voters to see them diverting public money to brands – no matter the research showing that every dollar paid out as an incentive returns anywhere from four to nine dollars back into the local economy.
There are no such hangups in Uruguay. But there is a battle between the Ministry of Culture and the Ministry of Economy with each new national budget negotiation. “They have very different agendas,” explains Mailhos. “Between them there is a budget allocation they have to split. Culture supports co-productions, national productions, and festivals that support local filmmakers. Economy channels money into the incentive because it is proven to pay back many times over.”
Culture won that battle in the European Union. No member state provides film incentives to commercial projects. But what of Serbia as it prepares to join the EU?
There is hope in the upward trend of territories adopting new and expanded film incentives worldwide. PSN and its Partner service companies keep producers up to date with their latest incentive parameters on this page of the PSN website:
https://www.productionservicenetwork.com/film-incentives/
Check back in with us anytime. And reach out to our Partners for a deep dive on how your next project may benefit from their local film incentive.
