The Country in Focus at EFM, Italy has enjoyed record levels of production in recent years, fuelled by its attractive 40% tax credit. But the government is working on reforms to its support for the industry, creating a climate of uncertainty in the sector.
The European Film Market (EFM) has Italy as its ‘Country in Focus’ this year and the recognition comes at something of a turning point for the Italian industry.
The territory’s film sector has much to celebrate. Italian films continue to win international recognition: Matteo Garrone’s Io Capitano has been shortlisted in the best international feature category at the Oscars. At home, local film There’s Still Tomorrow, directed by Paola Cortellesi, topped the 2023 Italian box office, attracting more admissions than global hits Barbie and Oppenheimer.
The Italian industry is ever more international. Recent years have seen growing investment by international groups such as Fremantle in Italian production companies like Lux Vide, The Apartment and Wildside.
The streamers have invested more in Italian content too, backing titles such as The Good Mothers (Disney+) and Supersex (Netflix). Italy is also co-producing with more countries: Anica and APA research recently cited a 51% increase in the number of films and TV series made with international producers. Italy and France, for example, co-produced 73 films and TV series between 2020 and 2022.
Irresistible incentives
A key factor fuelling this growth has been Italy’s generous tax credit, which was raised from 30% to 40% following the outbreak of the Covid-19 pandemic. It has proved a big draw for international shoots, including films such as Edward Berger’s Conclave and series such as Roland Emmerich’s gladiator-themed Those About To Die and Joe Wright’s Mussolini limited series M. Son Of The Century.
Recently published figures show how the tax credit has bolstered film production in Italy: 355 films were produced in 2022, exceeding pre-pandemic levels. This number includes 253 films that are 100% Italian and 63 co-productions.
In fact, the tax credit has been so successful that the government is working to reform it amid concerns too many productions are claiming relief. A particular fear is that relatively few of the hundreds of Italian productions backed by the tax credit manage to secure any meaningful distribution.
This is partly because the Italian box office has yet to recover to its pre-pandemic levels. Audience numbers are still 23% below the 2017-19 period. Cinemagoing habits have also been changed profoundly since the arrival of the streamers. The box-office success of There’s Still Tomorrow is very much the exception rather than the rule, despite the surge in local production.
Traditional Italian comedies aimed at the older demographic have collapsed in popularity. What’s more, many of the films backed by the tax credit are documentaries (a documentary only requires 15 cinema screenings to qualify).
The success of the tax credit has had further knock-on effects. Increased demand has helped drive up crew wages and the cost of facilities, making it more expensive to produce in the country. There is also talk of the Ministry of Culture being inundated with applications for the tax credit but not having the resource to process them, creating a backlog and making it difficult for smaller companies in particular to plan cash flow.
Last summer, Lucia Borgonzoni, undersecretary of state to the Ministry of Culture, told Screen International that the government is working on reforms to its tax credit in a bid to “raise the quality level” of projects that secure it. She expressed concerns that very few Italian productions backed by the tax credit were being seen by cinemagoers. “The tax credit is automatic but the wish is that it can be directed towards ever higher-quality production,” she said.
As yet, there are few details on how the tax credit will be reformed, but many within the Italian industry agree it is right for the government to amend it.
Roberto Stabile, head of special projects, Directorate General for Cinema and Audiovisual-Ministry of Culture at Cinecitta, stresses that the tax credit was raised during the pandemic to bolster the industry and has been a success. “Two years after the long pandemic period, the health of our audiovisual industry is very good,” he says. “But these kinds of support risk becoming like a drug for the market.”
He insists there will be “no crazy cut” to the headline 40%, but that the government was working to find the right level of state support.
Carlo Cresto-Dina, producer and CEO of Tempesta — which is behind all of Alice Rohrwacher’s features and Berlinale Competition film Gloria! — also says it is important to recognise the success of the tax credit in strengthening the Italian industry — but a review is the right move.
“Everyone repeats that too many films have been made because the tax credit has facilitated the production of many low-budget titles that, once completed, have had no life either in the market or in festivals,” says Cresto-Dina. “It’s true, and I am convinced we should find a way to give qualified access to the tax credit to ensure public money is spent on films that are then seen and enjoyed.”
But, the producer adds, it is equally important not to create barriers to entry and to guarantee access to public funding and the tax credit “even to new companies, which bring innovation and ideas”. He notes that some “large companies and groups” have obtained financing through the tax credit for tens — sometimes hundreds — of millions of euros’ worth of production. “All this is fine and is in my opinion a sign of the growth capacity of our industry,” says Cresto-Dina.
One proposal is that a new set of conditions be attached to receiving public money, which Cresto-Dina is favourable towards. “We could demand that a significant part of the rights generated by the tax credit remain the property of Italian companies, we could ask for guarantees on employment, gender equality, quotas for hiring disabled workers, demand the adoption of truly effective protocols for corporate sustainability and not the greenwashing practices that some funds seem to settle for,” he suggests. “In short, make sure that investments improve the quality of our industry and not just the balance sheets of large international groups.”
Other ideas for reforming the tax credit include a cap on the fees that can be claimed for actors, directors and screenwriters. Whatever changes are ultimately approved, some producers are worried about what happens next, given that Italy now has a right-leaning government led by prime minister Giorgia Meloni and her Brothers of Italy party, who were elected in 2022 alongside coalition partners including Matteo Salvini’s far-right League and the late Silvio Berlusconi’s centre-right Forza Italia.
Worrying trend
Many producers say the new government has a completely different attitude towards the Italian industry than previous leaderships. Those who are concerned point to creeping government control over the media through the appointment of right-leaning figures to head state-controlled institutions such as broadcaster Rai, the Centro Sperimentale film school and the Biennale (Venice Film Festival’s parent organisation) as well as at the state-funded David di Donatello Academy.
Others express fears the Italian government may water down the investment obligation on streamers such as Netflix and Disney+ to invest 20% of their revenues in independent Italian productions.
Like many producers, Andrea Occhipinti, CEO of leading Italian producer and distributor Lucky Red, is concerned about how long it is taking to reform the tax credit. “For the tax credit, we are in limbo between the old rules and the new ones,” he says. “This, combined with the risk that the government will allow the request from the streamers and broadcasters to reduce their investment obligations in independent production, has led to a dramatic slowdown of productions.”
Crews were fully booked last year, but 2024 has seen increasing unemployment, he says, while many small and medium-sized production companies are in financial trouble. “[The government does not] get how important the stability of rules and the protection of independent producers are for our sector,” says Occhipinti, who notes that Lucky Red was set to co-produce a feature film at Cinecitta Studios in Rome, “but the counterpart decided to go and shoot in another country because of the uncertainty”.
Simone Gattoni, CEO of leading Italian production company Kavac — behind films such as Marco Bellocchio’s Kidnapped and Marco Tullio Giordana’s upcoming The Life Apart — says the uncertainty about the tax credit is also affecting his business. Kavac produced five films last year, pushing forward production so that the features would be made under the scope of the old tax credit because “I didn’t want to expose the company to uncertainty in 2024”, Gattoni says.
As a result, this year Kavac is not set to produce any films and just one TV series. Gattoni believes there will be less production in Italy in the first six months of 2024 as a result of the uncertainty. He stresses how important the tax credit is to getting films produced, describing it as “an instrument of real financing”. But he adds that the tax credit could be viewed as overly generous towards TV, acting more as “a discount to the streamers and to broadcasters”.
Actor and producer Pier Giorgio Bellocchio, who runs Beta Film-backed production company Mompracem alongside directors Marco and Antonio Manetti, also notes there is no distinction in the 40% tax credit between film and TV series — and that this has boosted production levels (and costs) across the Italian industry. Bellocchio likens it to “doping” the cinema industry over the past four years. His colleague Marco Manetti accepts reforms are needed to help the cinema industry but is also worried about the future ‘quality’ criteria that films might need to meet to access the credit. “What would happen if you make a movie against the government?” Manetti asks.
“It’s complicated,” he continues. “I’m aware this is not a popular opinion. But as a film industry we should learn to rely on the state a little bit less and to find other ways to look for audiences, buyers and international collaboration.”
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