Italy backtracks tax credit scrapping

Speaking in Venice this week, Riccardo Tozzi [pictured], President of Italian film body ANICA, has welcomed the Italian Government’s decision to back track on its threat to scrap tax credits for the film industry.

Had the tax credits gone, many industry observers predicted disaster for Italian cinema. In the event, though, the Government has thrown its support back behind the industry.

It is now proposed that the tax credits will be put in place on a permanent basis rather than have to be renewed every three years.

“Now, I think the problem is resolved for ever,” Tozzi told ScreenDaily in advance of a special conference in Venice at which the Culture Minister Massimo Bray was attending. “Now, I think the problem is resolved forever because now the new law implies it (the tax credits) is definitely a permanent tool that has its own source of financing in the state budget.”

Film industry lobbyists led by ANICA were able to demonstrate that the tax credits were helping rather than damaging the Italian economy.

“When we managed to make it very clear to Mr Letta [the Italian Prime Minister], he immediately acted to establish the law and in a permanent way, which is better than in the past.

“The entire Parliament asked the Government to establish the tax credits,” Tozzi continued. “There is no fight about it.”

The presence of Minister Bray at the Venice Film Festival has been widely interpreted as a sign of the positive feelings of the Government toward the film industry.

“He is a very open and cooperative Minister and he was himself shocked,” Tozzi recalled of when the tax credits were first threatened.

The Italian Film Tax Credit scheme was introduced by the Finance Act 2008 and has been in operation since 2009.

Tozzi acknowledged that the tax credits may be revised in future.

At present, the system works on three levels. There is a “pure” rebate of 15% on production. There is also a tax rebate for investors outside the film industry. (“This doesn’t work so well and we think that (it) must be revised,” Tozzi said.) The third element is the tax credit for foreign companies shooting in Italy. This is considered to work well but the credit is currently capped at a relatively low rate.

“I think we have to raise it,” Tozzi said of the tax credit for foreign companies. “It attracts medium productions but doesn’t attract the very big ones because the limit of €2.5m is not encouraging.”