07/07/2005

Negotiations between the German goverment and the opposition regarding thereform of the Income Tax Code as envisaged by the former, have failed, to the relief of film and TV professionals, since the planned reform would put an end to German media funds, especially the very popular tax-shelter which allowed investors to spend 13 billion euros between 1997 and 2004 (80% of which went, not to European films, but to Hollywood productions).

To compensate for the elimination of tax-reliefs, Chancellor Schröder's governement announced the creation of 'venture capital funds’ for about 90 million euros through which the State will be able to invest in German films, up to a ceiling of 20% of thebudget. This initiative responds to the attempts from film and TV professionals to find alternative investment schemes based on obtaining returns on investments, rather than simply getting relief for losses. However, this programme remains to be implemented, and is therefore heavily dependent on the very unclear future of the tax reform.

The elimination or not of the tax-shelter will depend on the result of the general elections, in September. The opposition (liberals and christian democrats) is likely to win, in which case, the tax-reliefs would be maintained.

In the meantime, film and TV professionals and investors have decided to create a lobby. The constitution of 'Media Initiative Germany' will be officially announced tomorrow, during the ceremony for the German Film Awards.

(Translated from French)