Lithuanian Film Tax Incentive came into effect in January 2014 as a new policy measure to foster local and foreign film production in Lithuania. It offers an opportunity to save up to 20% of the film production budget through private investment scheme. Since the introduction of the incentive there has been a rapid growth in the number of foreign film productions.
How it works?
As a foreign filmmaker you have to cooperate with one of the local production companies that will submit the application. The local company will take a responsibility of finding a local film donor willing to invest up to 20% of your production budget in exchange of a reduced corporate income tax.
The process is explained in the scheme below:
Who benefits from this scheme?
Film production companies get a financial aid for filmmaking in Lithuania if their production meets eligibility requirements and they comply with the formal procedure approved by Lithuanian Film Centre.
Private donors in return can deduct the amount granted for filmmaking process from their taxable income. The estimated net profit for the donor participating in the scheme is up to 11,25%.
The incentive is available for the production of feature films, TV dramas, documentaries and animated films. It includes domestically produced, co-produced or commissioned films (produced under the service agreement). At least 80% of eligible film production costs must be incurred in Lithuania and the total amount of eligible spend in Lithuania has to be no less than 43,000 EUR.
Ineligible costs are the following:
- Costs of a consultation concerning the preparation of the application, and costs of the preparation of the application;
- Fines, penalties, litigation costs;
- Acquisition of fixed assets, construction, reconstruction costs if they are unrelated to the production of the film;
- Travel costs when the Republic of Lithuania is not the place of arrival or departure;
- Development costs;
- Film promotion and marketing expenses;
- Film distribution costs;
- Payment for actors (if the payment exceeds 4% of the production costs of the film or its part).
Film Tax Incentive is only available for films that meet the approved production and content requirements. Pornographic production and films promoting violence are not considered for the Film Tax Incentive.
Cultural content requirements:
- The screenplay or central theme of the film are based on events that are part of Lithuanian or European culture, history, mythology or religion.
- The film tells about a character or personality who is part of Lithuanian or European culture, history, society or religion.
- The screenplay or central theme of the film is based on a culturally significant work of national or European literature.
- The film reflects important Lithuanian or European values such as cultural diversity, solidarity, equity, minority rights, human rights, tolerance, environmental protection and respect for cultural and family traditions.
- The film focuses on the issues of Lithuanian or European identity, customs and traditions.
- It is not a promotional film, an advertisement, a television programme, a music video, a computer game or a television series that is broadcast daily or several times per week and which has certain character schemes and narrative structures that would allow them to be continued endlessly and do not create any artistic value, including but not limited to situation comedies and soap operas.
- At least three days of shooting take place in the Republic of Lithuania during the course of production of a film (except for animation projects).
- During the course of production of an animation project, at least 10 percent of all or at least 20 percent of two of the elements listed below will be created or produced in the Republic of Lithuania:
- shooting (if the script so requires);
- developing and/or creating visual or graphic design of characters, set and props;
- compositional layout of a frame, storyboards;
- animatic, visual and special effects.
- At least 51 percent of the crew hired by the Lithuanian film producer are citizens of the Republic of Lithuania or citizens of other European Economic Area countries.
- Law amending and supplementing article 2 (Corporate Tax Law)
- Procedure of production and cultural content evaluation
- Procedure for issuing and investment certificate
For more information, please contact Milda Vakarinaitė email@example.com