HUNGARY – TAX REBATE

In recognition of the importance of the film industry, Hungary has committed itself to becoming one of the most attractive and competitive film locations in Europe. To achieve this goal, the government introduced the Motion Picture Act in April 2004, Which has been providing exceptionally favourable conditions for shooting films on location in Hungary. In June 2008, Hungarian Parliament passed the amendment of the Act on Motion Picture to implement certain changes requested by the European Comission as well as extended the aviability of the system until December 31st 2013.

With the tax system foreign producers can not only reduce their costs by 20% thanks to a rebate on expenses incurred and paid for in Hungary but able to further claim 5% relating to this 20% on non-Hungarian spend based on the European Union’s „territorialisation rule“. The following chart translates this concept to specific numbers to help you understand what this means:

Also, from 2008, every production must be subject to a cultural test in order to qualify for the rebate. Productions have to achieve minimum 16 points out of 32, and they also have to meet at least two of the eight cultural criteria.

The financing of this 20+5% refund comes from Hungarian Corporate Tax Payer(s) who are able to reduce their tax base and their eventual tax obligation by the amount of their contribution to a film. The contribution is solely for domestic tax-reduction purposes. The rebate is paid either to the local producer or directly to the foreign producer after the Hungarian portion of filming and/or post-production have been completed. In addition to this, local banks are offering to cash-flow the rebate along with the local VAT.