The scheme for the promotion of the film industry in Cyprus has started giving fruits less than a year after its introduction.
Already two Hollywood movies are currently under production in the island, starring famous actors, such as Nicolas Cage and William Baldwin. Shootings for one of the movies have already started while preparations for the other are currently in the final stages. Indeed for the latter there are more than 50 vacancies advertised by the production company, while technical and support equipment is currently sought.
The scheme provides the following incentives:
· a cash rebate of up to 35% of qualifying expenditure incurred in Cyprus per production in a 12-month period, with a total for all productions equal to EUR25,000,000 per annum. The percentage of the rebate will be determined based on certain criteria of a cultural nature (including participation of local actors, of cultural elements, etc.). The rebate will be granted upon completion of shooting and after a financial audit is completed;
· as an alternative to the above, a tax credit available to the production company. The same criteria as with a cash rebate apply for this option as well. Furthermore, the application needs to be submitted by a legal person, which is liable to tax in Cyprus and the credit can not exceed 50% of the taxable income in the year in which the production takes place. Any unitilised amount of the credit can be carried forward for five years;
· a tax deduction on capital expenditure (filming infrastructure and technological equipment) not exceeding 20% of deductible expenses for small businesses and 10% for medium size businesses. In case of equipment, this must remain in Cyprus for a period of at least 5 years; and
· a VAT refund available to the production company for selected expenses made for the production by physical persons or legal entities from third countries.
Furthermore, Invest Cyprus, which contributed for the development of the scheme, will be assisting producers with issues such as entry permits, working licenses, film licensing, importation of equipment and other material as well as with the provision of guidance and information, in cooperation with the relevant authorities.
Qualifying expenditure includes the following:
• production company services
• labour cost
• emoluments for the cast
• accommodation in Cyprus
• rental of mechanical, acoustic equipment and other equipment
• costs for food
• costs for construction of scenes, sets, stage effects, etc.
• utility costs
• transportation costs
• costs for use of public and archaeological sites
• company registration costs up to EUR1,000
• security costs
• costume expenses
The scheme aims to put Cyprus on the map of attractive destinations for shooting films and other audio-visual productions.
It is expected that together with some other advantages offered by Cyprus, such as good geographical location and convenient time zone, excellent and steady weather conditions including many days of sunshine, short travel distance between different locations within the country and the variety of landscapes, this scheme will help in placing Cyprus in the list of attractive locations for international film productions.
Other important incentives already available in Cyprus, which could be combined with this scheme, include the following:
· citizenship and permanent residency by investment;
· 60-days tax residency scheme;
· exemptions from emoluments earned in Cyprus for persons who become tax residents to work in the country;
· “non-dom” regime (exemption from all taxes on dividends, interests and rents irrespective of where they are earned and of whether they are received in Cyprus or not);
· notional interest deduction on fresh equity (applicable to both new and existing companies as from 1 January 2015);
· IP Regime with 80% exemption of profits on qualifying intangible assets.
We would be more than glad to provide further information on any of the above incentives or on the Film Production Scheme or indeed on any other matter concerning Cyprus and to discuss specific cases with you with no commitment. You can contact us on seamark@seamark.com.cy or on 0035725504000.
