German producers are feeling cautiously optimistic following recent and planned film funding reforms, which they say could spur a significant increase in production in the country. It is estimated the reforms could inject an additional $600m (€550m) of financing into German production.
As a result, several major US films and TV series are understood to be actively eyeing Germany as a location. German producers with whom Screen International has spoken also say they plan to film projects in the country this year that might previously have gone abroad.
All this comes at a crucial moment for the German industry, which has been hard hit by inflation and reduced expenditure by cost-conscious broadcasters and streamers. Germany has also lost a swathe of productions to territories such as the UK, Hungary, Czech Republic, Austria and Italy, which offer more attractive film incentives. For example, Constantin Film chose to shoot Hagen, its big-budget reimagining of a German folk tale, in the Czech Republic. Germany has also hosted fewer international shoots than in recent years.
Transition year
The territory’s new film funding law was passed by the outgoing SPD-led coalition government in December. Production funding awarded by the Federal Film Board (FFA) has changed from a selective to a largely automatic system. Funding is now granted to a producer, screenwriter or director if their previous film has had success in cinemas or at leading festivals.
In the past, FFA funding was mainly based on jury decisions and only partially rewarded successful releases. In 2024, FFA — which is funded by a levy on cinemas, broadcasters and streamers — spent $37m (€34m) to support film production.
Katharina Hiersemenzel, chief strategy and policy officer at German producer and distributor Constantin, says the new film law is a “necessary first step to a generally more automated system which rewards creative and economic success”.
The new film law is, however, only one of three film reform “pillars” the German industry wanted to be implemented for the beginning of 2025. The SPD-led coalition did not have enough time to deliver the two missing elements: an internationally competitive tax incentive at 30% of German spend; and an investment obligation on streamers set at 20% of German turnover.
The local industry is hoping the incoming government being formed after February’s election will implement these pillars. Conservative leader Friedrich Merz, whose CDU/CSU alliance won most seats, is trying to put together a coalition with the SDP. His government is expected to be in place by Easter.
In a boost to the industry, the outgoing government announced in December it would extend Germany’s national production subsidies for another year and increase them from 20%-25% to 30% for feature films and high-end TV. The subsidies are paid through the German Federal Film Fund (DFFF) and the German Motion Picture Fund (GMPF), and cover production costs in Germany.
The downside of the GMPF/DFFF system is the total amount paid to productions annually is capped and must be agreed politically each year. The total budget for the GMPF/DFFF schemes is $145m (€133m) for 2025; some fear it may run out before the end of the year.
The industry is now lobbying for an uncapped tax incentive, without a per project or total cap, to replace the GMPF/DFFF system. It is understood the incoming government alliance is in favour of the tax incentive.
Turning to the streamers
The third pillar of reform is a funding obligation on streamers and other VoD services. This would oblige them to invest 20% of their German turnover on production in the country. Producers would also be able to retain certain rights to their projects.
It is understood the CDU/CSU are also in favour of the investment obligation, although some think it may be reduced to around 15%.
“We have heard a lot of support from especially the Social Democratic Party (SPD), but also the conservatives (CDU/ CSU) for the combined package of the tax incentive and the investment obligation with a rights retention mechanism for producers at its core,” says Hiersemenzel. “Many know it is important and that they have to act quickly so Germany remains internationally competitive.”
She thinks the combination of the two could lead to around $600m (€550m) in additional support being unlocked for production in Germany: about $327m (€300m) through the tax incentive and $272m (€250m) via the investment obligation.
These figures are likely conservative. When France introduced a 20% investment obligation in 2021, it led to a surge in production spend by the streamers: between 2021 and 2023, Netflix, Disney+ and Prime Video spent a combined $966m (€866m) in France, according to a CNC/Arcom study, mainly through the acquisition of pay-1 rights.
Many in the German industry say the new tax incentive and investment obligation will be in place for January 2026.
Jonas Dornbach, producer and managing director at Komplizen Film, believes the investment obligation would spark a “huge investment” in production in Germany.
Dornbach also believes more production will come to Germany with a 30% incentive. He points out Germany has always had “very attractive” facilities and infrastructure for filmmakers, as well as skilled crews — but that a competitive tax credit has been a crucial missing element.
“We will shoot more in Germany due to the incentive,” says Dornbach, citing Komplizen’s planned co-production of Caroline Link’s The Years With You, which will shoot in Germany this summer as well as on location in Italy and Chile. If not for the 30% incentive, it would likely have filmed in Austria.
Maximilian Leo, co-founder of augenschein Filmproduktion, says the 30% rate will help at a challenging time for funding films. When combined with regional funding, German producers can raise around 50% of their financing within Germany for co-productions.
Augenschein, recently the German partner on Fleur Fortune’s UK-Germany-US co-production The Assessment, is now setting up the Russell Crowe and Ethan Hawke-headlined co-production The Weight, directed by Padraic McKinley and set in 1930s Oregon, for a shoot in Bavaria this summer. The project has secured $2.2m (€2m) from the Bavarian regional film fund, FFF Bayern, and will also tap into the 30% incentive.
Leo stresses the decision to shoot in Germany was based as much on the financing available as for the Bavarian forests’ ability to double as Oregon. “It became an organic decision for the project, which we always try to look for in a co-production.”
However, even with a 30% incentive, Leo thinks Germany will remain a “tier two” choice for service productions compared to rival countries with strong tax credits such as the UK or Spain. But for independent co-productions with “real producing partners” in Germany, the country becomes a first choice “because you can combine it with regional funding, and then the magic starts. You can even outbid traditional service producing countries.”
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