Tax Credit - Hungary

http://english.mmka.hu/
1. WHAT IS IT?
Indirect state subsidy through a tax certificate issued by the National Film office (NFO). Non-recourse, non-repayable and non-recoupable cash rebate, based on the Hungarian eligible production expenditure provided by local corporate tax payers’ ‘sponsors’.
2. WHO IS ELIGIBLE TO PAY FOR IT?
Applicant must be a Hungarian company or a Hungarian branch of an EU company registered by the NFO.
Applicant must be the film’s producer, co-producer or production service provider who is responsible for and actively involved in the production of
the film throughout.
3. WHICH FILMS QUALIFY?
Feature films; animation; documentary; experimental; TV film; mini-series. Films with highly violent or pornographic content are excluded. Also excluded are TV sitcoms; reality shows; daily soaps. Films registered after 1 January 2008 need to pass a cultural test with a minimum of 16 points out of 32 in the following categories:
• Cultural content: 8 points.
• Cultural contributions/hubs/practitioners: 24 points.
4. WHAT IS IT WORTH?
20 cents of every Euro of eligible Hungarian and non-Hungarian spend, which is worth 25 cents of every Euro of eligible Hungarian spend.
Definition of eligible HU spend
• : Production expenditure as per the film’s registered budget/spent by applicant(s)/accounted separately in the books of the applicant(s)/paid to Hungarian tax-registered sub-contractors (both companies and individuals). Definition of non-HU spend: Same as above with the exception that it can be paid to any foreign (non-Hungarian) entities. It is capped at 25% of the eligible HU spend.
Excluded costs:
•
a) Costs of copyright and acquisition of underlying rights costs above 4% of the budget.
b) Producers’ fee above 4% of the budget.
c) Marketing and publicity costs above 5m HUF or 2% of the budget.
d) Travel costs without a Hungarian destination.
e) Costs of services performed by foreign tax-registered entities – including non-Hungarian cast and crew – above 25% of eligible HU spend (transferred services bought from foreign entities need to be deducted from eligible HU spend).
Third-country location shooting: any cost incurred abroad counts providing it fulfils the requirements for definition of eligible HU and non-HU spend.
5. HOW TO CLAIM IT?
The film needs to be registered at the NFO. Application for the registration needs to include script, budget, production schedule, crew list, co-production agreement or PSA agreement with the sponsor, ledger of the separate account from the book(s) of the applicant(s). To register the film 100% financing of the local split budget needs to be proved. Upon completion of the production or after having finished a certain part of the production an application for a tax certificate to be filed to the NFO. The application needs to include the ledgers and other related lists obtained from the books of the applicant(s) and the supporting documents (e.g. contracts, bank statements). After the NFO has concluded the audit of the submitted documentation, the final amount of eligible HU and non-HU spend plus the amount of the 20% rebate is quoted. The NFO issues the tax certificate with the equal amount of quoted rebate. Upon receiving the tax certificate the sponsor transfers the fund to the producers.
Remember to exclude the tax credit from your film budget.
Check QuickFilmBudget.com for a sample film budget!