Lithuanian film tax incentive scheme encourages business investments in film sector


Today Parliament of the Republic of Lithuania has adopted the amendments to the Law of Corporate Income Tax. The new film tax incentive scheme sets up favourable conditions for the business companies’ investment into the film production. Both foreign and local producers filming in Lithuania will be able to benefit from the scheme.

„These changes are important to the film industry and the business sector. The new tax incentives scheme is an opportunity for the profitable companies to support film production and reduce their corporate income tax at the same time. This scheme shall become an additional source of financing to the existing State aid mechanism and revenues out of value added taxes for the film distribution and exhibition in the film theatres“, – says Rolandas Kvietkauskas, the head of the Lithuanian Film Centre.

According to Lithuanian tax incentive scheme approved by the European Commission in December, 2012, Lithuanian Film Centre will administer the scheme. The Commission of experts will assess the cultural content of the films on the basis of the script and will determine if the film meets at least two of five cultural criteria. Precise procedures of applying the scheme in practice shall now be determined once the secondary legislation is adopted.

The tax relief will be granted to a Lithuanian or foreign entity acting through a permanent office that has provided a donation to a film producer for the production of a film in Lithuania. The direct beneficiaries of the tax relief shall be entities with a Lithuanian corporate tax liability, including foreign entities or citizens acting through a permanent office or a permanent base in Lithuania or individuals with an income tax liability in Lithuania.

Under the new scheme, the mechanism is possible provided that at least 80% of all the expenses for the film or its part production are incurred in the Republic of Lithuania and the expenses incurred in the Republic of Lithuania are at least LTL 150 000 (43 443 EUR) and the aggregate maximum amount of the donation funds provided does not exceed 20% of the production costs of the film or its part.

The tax incentive scheme will start operating from the 1st of January, 2014 and will run until 31st of December, 2018.