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Country Focus: Germany

Germany 2007 - The new production cost reimbursement model


Germany 2007 - The new production cost reimbursement model

As from January 2007, the German film industry is to be supported by the BKM via a newly developed bonus model which is based on the principles of “German Spend“ and “German Content“ and was developed under the aegis of Bernd Neumann, the Federal Commissioner for Culture and Media. 60m € per annum are to be made available with the new model to the German film industry for the duration of the current parliamentary term. After the general direction of the new model - as developed by an advisory committee - was established in July 2006, the parameters were announced by the BKM in mid-October.

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A special report made with the support of German Films

German Spend & Content

The new funding monies are in the form of a public subsidy amounting to 16 - 20% of the production costs spent in Germany (German Spend). The money is to be granted and paid out automatically on the fulfilment of the funding criteria and without the involvement of an allocation committee. Since this is a so-called lost subsidy rather than a success-linked repayable loan, the monies neither have to be secured or repaid and remain with the producer in the same way as the FFA's "reference" funding. The bonus may be accumulated with other funding, but is also subject here to the European rules on the maximum limit of accumulated funding of 50% or 80% for small or difficult films. In addition, there is a limit on the maximum funding sum per film, which is unlikely to be reached on an average German film production.

Applications can be made by producers who have the company headquarters or a subsidiary in Germany and have produced a German theatrical feature film alone or as a majority co-producer as a "reference" film in Germany or in another EU member state within five years preceding the application. The contribution of the applying German producer must amount to at least 25% of the production costs and, moreover, the regulations of the bilateral treaties with other countries as well as those of the European Co-Production Convention hold force. Over and above this, depending on the genre (feature film, animation, documentary), there is a catalogue of criteria with points referring to German Content, which go beyond the regulations of §§ 15ff. of the Film Funding Law (FFG) and those of the treaties. A cultural test, similar to the points test of the European Co-Production Convention, will require a minimum number of points for funding to be granted. Co-productions which are produced according to the European Convention on the Co-Production of Cinema Films will fall under the points system applied there.

Funding is only given to films with a planned theatrical exploitation. Therefore, at the time of applying, a distribution or sales contract must be submitted in which the film's release in the cinema is agreed with a minimum number of prints set according to the funding volume. In addition, the distribution company must have released a minimum of 3 feature-length films in the year preceding the application, the FFA providing a list of approved distributors.

A scheme strongly supervised

Feature films must provide evidence of a minimum budget of 1m € to qualify for funding, animation films a budget of at least 3m € and documentaries a budget of at least 200,000 €. The production costs spent in Germany and qualifying as German Spend must amount altogether to at least 25% of the total production costs (or at least 5% for a budget of over 25m €). The costs of the German Spend include film-related goods and services rendered in Germany by persons who are subject to taxation in Germany and by companies whose headquarters or subsidiary are situated in Germany and who fulfil yet further criteria. German Spend does not include costs for development, acquisition of underlying rights, legal, financing, insurance, overheads, travel and transport costs as well as actors' fees which go over 15% of the total production costs.

Some of the FFG regulations have also been adopted: the holdback regulation will apply, the producer's own contribution must be at least 15% and § 15 FFG with respect to the requirements for a German language version will apply.

The application for the 20% production cost reimbursement will only be accepted when evidence can be given that at least 75% of the film's financing is in place.
If all of the application conditions have been met, notification of approval will be given; this will expire again if, within a certain period after the approval, evidence of the overall financing cannot be provided or if, within a further period, shooting has not begun and the film has not wrapped within the indicated shooting period. In this case, a second new application is possible. The FFA issues a preliminary approval and disburses on production of a guarantee or a completion bond in instalments of 33% according to the production's progress: upon commencement of principal photography, upon completion of the rough cut, and then on the auditing of the final cost statement.

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