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Malta Teaser for Film and TV Production

51 MaltaMalta has a proud record of facilitating film production.

The list of credits is long, but includes Clash of the Titans, Raise the Titanic, Troy, Munich and Gladiator. Malta's involvement in film production can be traced back to the 1920s.

Malta is something of an exception to the rule within the European Union by having a buoyant economy, partly helped by having a small population and being very flexible. Apart from tourism, a number of industries and financial services are based in Malta.
Apart from its renowned water tanks at its Mediterranean Film Studios, Malta like many countries recognises the value of film production and as such offers various incentives.

The incentives concern infrastructure and production.

So far as infrastructure Malta offers companies and individuals investing in audiovisual in Malta can qualify of up to 50% tax credits of the investment within the country.

So far as producers are concerned films using Malta as a location can obtain a cash grant or rebate of up to 22% of their EU expenditure in this country.

Film financiers benefit too and can invest in audiovisual productions through investment funds registered in Malta and be exempt from paying tax on dividends and capital gains obtained through their investment from Malta. No withholding taxes are imposed on dividends, interests and royalties paid to non residents. This affords great flexibility in the repatriation of profits from Maltese investment vehicles. Malta has an aspiration to be a centre of excellence for financial services by 2015.

When considering an application the Malta Film Commission takes account of all other possible State subsidies, including aid provided by other EU member states, in order to ensure that State Aid does not exceed fifty per cent of the total production budget. This is monitored at two stages, first when the application is made, and again when the Film Commissioner recommends to the Malta Film Commission on the amount of incentive to be granted.

VAT is currently 18% and is fully refundable to productions on all goods and services.

There is a cultural test which will be addressed later in this article.

The three main bodies for dealing with these aspects of film finance and investment are the Malta Film Commission, the Malta Financial Services Authority and Malta Enterprise.

Production or filming on the Island.
Audiovisual film production on the island will attract a cash rebate given to qualifying companies for production expenditure incurred in Malta. Audiovisual production does include feature films, television productions, mini series, animation, but not computer games, and documentaries that are all or partially produced in Malta.

The standard rebate system does not apply to low budget films with a total production budget of not more than 100,000 Euros, to what are termed ‚'difficult films‚' meaning a film which would have little, if any, prospect of commercial success because of its experimental nature or it represents a high level of creative risk. The level of financial incentive to be given to these two types of film is based on a different set of criteria.

The financial rebate can be up 22% of qualifying expenditure and the rebate is received once the shooting has been completed. The cash rebate is normally paid within 5 months of completion of the final application. The qualifying expenditure can include labour, accommodation, SFX, travel, air travel and shipping within the EU wardrobe.

However, when fixing a production budget one has to make sure that certain activities or expenses do not exceed a set percentage of overall budget; for instance catering and craft services provided on location shall not exceed 15% of total eligible expense; generator costs must not exceed 15%. In the case of labour costs expenditure on employees directly engaged with the production company on a full time basis, part time basis or with a contract of services, who are nationals of an EU/EEA member state are employed/posted in Malta, in accordance with the laws of Malta must not exceed 15% of total eligible expenditure. This is provided that eligible expenditure for so called ‘above the line’ direct employment such as directors, producers and cast members, and for employment of heads of department in the below the line category, is limited to 50,000 Euros.

The Maltese rules differentiate between above the lines labour costs that include salaries for producers, director, cast, stunts including their travel and living expenses as well as other associated costs.

Below the line labour costs refer to labour directly engaged on a production during its shooting in Malta, except those included in the above the line labour and expenses. It should be noted that all Heads of Departments are excluded as eligible below the line labour.
The whole process is complicated and beyond the scope of this article. When presenting figures they should be presented net of Value Added Tax and also give an estimate of the expenditure on non eligible items.

Once all the information has been provided the Malta Film Commission shall determine what percentages are rebated to qualifying productions.

However, there does appear to be a ‘but’ in the process as the amount of rebate is subject to certain additional factors namely:-
- The amount of funds allocated by the Maltese government in any particular financial year.
- The ranking of the qualifying production based upon the cultural test criteria and the creative contribution.

If the qualifying production scores 40-45 points in the cultural/ creative test then the rebate is 15%. However, if it scores 66-72 points then the qualifying production would receive 20% rebate plus a 2% bonus if Malta is featured as Malta rather than for instance a moonscape.

As mentioned earlier there is special provision for difficult and low budget productions. In respect of these categories of films, if the cultural test points are between 40 and 45 points then the rebate is 18%, whereas if the points scored are 66%-72 points then the rebate is 30% plus the added 2% bonus if Malta features as Malta.

As an example, the cultural content criteria includes, a maximum of 4 points if the production features a Maltese, European or Mediterranean story (factual or fictional), and 2 points if the production uses Malta’s cultural subjects and landmarks that allow them to feature in the setting of the production.

Should the production have a guaranteed, proven or intended theatrical or television distribution in at least 24 or more EU member states then a maximum of 20 points will be awarded.

The use of a editor from either Malta or an EEA national will attract a further one point.

If the production receives final approval then the Malta Film Commission must receive a compliance report and a film credit on the titles within four months of conclusion of the production.

Whilst Malta is an attractive place to operate including the availability of a skilled and ‘can do’ workforce some of the calculations as to what is and is not eligible expenditure is complicated, the Commission has a discretion what to award by way of rebate and the monies available to be rebated is governed by the available fund set aside to finance the rebate. The way low budget and difficult films are addressed is interesting and helpful to those who wish to make films of creative worth but limited box office appeal.

Julian Wilkins

Julian Wilkins is Editorial Director for Blue Pencil Media Limited. Julian has a LLB (Hons) in law and M.Phil in law as well as a Diploma in European law and was admitted as a solicitor in 1988; he practices in the area of media, entertainment, and intellectual property law as a consultant for Devereaux Solicitors in London. Julian is also a Notary Public and CEDR accredited commercial mediator. Julian has written for academic publications and contributed to an Exhibition Catalogue about 1960s photographer Philip Townsend. Julian is a member of the International Association of Entertainment Lawyers and also the British Institute of International and Comparative law. Julian is a finalist in The Media Lunch Club “Short Circuit” script competition to be held in November 2011. Julian’s comments “The rapidly changing world economy and technology is presenting incredible opportunities for the Creative Industries and Blue Pencil hopes to reflect and contribute to these changes.”

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