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FUNDING Lithuania

Lithuania’s tax incentive shows off four years of impressive results

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- Implemented in 2014, the financial scheme has proven to be a success for the local film industry and will serve as a guide for the next five-year plan

Lithuania’s tax incentive shows off four years of impressive results

The Lithuanian Film Centre has published a piece of research that shows the results of the national tax-incentive scheme for film production over a period of four years, from 2014, when the scheme was first introduced, until 2017. According to the research, which was entrusted to Belgian creative-industry consultancy KEA European Affairs, the period was exceptionally prolific both for national film productions and for international co-productions, and was profitable for the national industry and economy.

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In detail, during that period, Lithuania received €24.4 million worth of investment from foreign film producers. A total of 68 filmmakers made use of the tax incentive, and 23 movies staged by international companies benefited from the scheme. The Lithuanian tax incentive supported productions by the BBC and HBO, among other firms. As expected, the huge investment in film projects that have received the tax incentive has also helped to boost employment directly in the film industry, but also in other related technical and administrative sectors, and even in hospitality and transport. According to the data, 12,000 new temporary jobs were created over the period, meaning that almost €11 million came back to the state as taxes.

This fruitful period also allowed Lithuania to consolidate its position in the audiovisual market, offering services to international co-productions, and also competing with more established industries in the Baltics and Western Europe. The tax-incentive scheme also seems to have been beneficial for local professionals, as they have a direct, collaborative link with international companies, while Lithuanian producers simultaneously have easier access to a wider array of offers and co-productions. This is expected to bear yet more fruit in the years to come, as it will attract even more investment.

Rolandas Kvietkauskas, director of the Lithuanian Film Centre, underlines: “It was important for us to assess whether the selected film industry development tool has been effective. This knowledge is essential for applying the scheme over the next five-year period. The researchers’ forecasts are supported by the results of the first half of 2018 – expenditure on film production in Lithuania exceeded €14 million, while business investments neared €3 million. We hope that this tool, which creates such versatile value for the national economy, will continue to encourage cooperation between cinema and successful businesses in the coming stage of the incentive.”

Expectations for the third and fourth quarters of 2018 are also high, as expenditure on film production should total €27 million, with more than €5 million of that amount coming from local businesses. It should be noted that the tax-incentive scheme, which is administered by the Lithuanian Film Centre, enables filmmakers to finance up to 20% of the movie production budget with private funds, while any company operating in Lithuania and paying money to a Lithuanian film producer is eligible for the scheme, which allows the company to reduce its taxable income and payable corporate tax.

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