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Industry Report: Financing

Czech Republic ups rebates to compete in Europe


- Back in the mid-1990s, the Czech Republic sealed a reputation as a film-friendly venue thanks almost entirely to one film: Brian De Palma's "Mission: Impossible." But its luster faded when other European countries introduced rebate schemes, while the Czechs didn't.

With a new rebate program in effect since June, local crews and service providers are hoping foreign filmmakers will be back and willing to take on the kind of massive project "Mission" did when it lit two miles of riverfront around the Charles Bridge, involving 11 generators on the banks of the Vlatava river.

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"Many of the reasons why foreign productions flocked to the Czech Republic in the first place will once again be the reasons for them to return," says Daniel Frisch, president of Prague-based International Production Co. "Our company is already witnessing an increase in interest from foreign productions."

Ludmila Claussova, director of the Czech Film Commission, predicts a dramatic increase. "The ministry of culture has received more than 20 applications from (foreign-based) producers," she says. "So interest is there."

The rebate, adopted by the government in October after its approval by the European Commission, offers a 20% return on qualifying Czech spend and 10% on qualifying international spend. Total spend should not exceed 80% of a project's budget.

This year, about $19 million is being disbursed on a first-come, first-served basis under the rebate program. Projects eligible for support will have to have at least 75% of their budget already in place before they can apply for the money though the money itself is not disbursed until shooting is over.
"Producers will also have to show that their project has some cultural potential and some European or local aspect," Claussova adds. "All incentives given in Europe to the film industry have cultural tests attached. The Czech cultural test has similar criteria to those in Germany and Hungary and similar films have passed in those countries."

In the first two months of the incentive program's existence -- July and August -- 38 projects have passed the cultural test, according to Claussova, and 12 projects have already qualified for a rebate, including five international productions. Among them are "Mission: Impossible 4," the French-Czech co-production "Philibert," Lucasfilm's "Red Tails," Paramount's "The Return of Xander Cage" and "The Borgias," a French-German TV production with a Czech co-producer.

To qualify for a rebate, movies and TV must have a Czech co-producer on board, since only registered Czech income-tax payers can apply.

There is no cap on the amount of rebate per project, and rebates are to be issued at the end of production upon submission of audited statements of costs incurred, then paid out in the form of cash grants.

American productions that shot in the Czech Republic during the past few years ranged from Martin Campbell's $150 million James Bond film "Casino Royale" to Eli Roth's $4.8 million "Hostel," the first U.S.-distributed film made by an entirely local crew.

"It was the first time we were able to impress upon a director that he can put his career on the line [with locals], including the director of photography," Frisch recalls.

As for the Bond film, it had a level of cooperation it might never have found elsewhere. "Producers wanted to film a major action scene involving terrorists trying to blow up an airplane at an American airport," says David Minkowski, head of film production at Stillking Films. "We filmed most of it at Prague airport. We had full access airside and closed down an entire terminal for four nights. Even Richard Branson flew in a brand new Virgin jumbo jet and appeared as an extra in the film."

More recently, Timur Bekmambetov's action thriller "Wanted" and Andrew Adamson's "The Chronicles of Narnia: Prince Caspian" were shot here, the latter becoming the biggest Hollywood production in the country in terms of budget and spending, which was in the $60 million-$65 million range.

Still, those rival rebates -- particularly in Germany and Hungary -- have siphoned off business. The Czech film industry's revenues have declined substantially as a result.

In 2008, the Czech spend of international film productions went down $36 million, from $109 million a year before, according to the Czech Audiovisual Producers' Assn. In 2009, that figure increased only slightly to $38.5 million.

Among the few foreign films shot in the Czech Republic during the slow period was the French title "Solomon Kane."

A change has already been manifest with the new incentive scheme.

"We are already profiting from this new situation as a co-producer on 'The Borgias,' " the TV miniseries that plans to shoot here from October-May," says Veronika Finkova, head of production at Etic Films. "With these rebates, the Czech Republic has the conditions to compete with neighboring countries."

"French filmmakers are also shooting director 'Philibert' at Barrandov Studios from June-September," adds studio spokesman Dusana Chrenekova. "As for U.S. productions, we are in discussion about several."

Whether Czech producers themselves are doing enough is whole other matter.

"It's very important not to be 'out of sight, out of mind,' " Frisch says. "It is up to the local companies to spread the word."


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