How are Eastern Europe’s established location strongholds responding to increased regional competition for footloose international projects? In the Czech Republic, which is very well-regarded by producers, its production rebate has already run dry this year

The Czech Republic proves incentives do not guarantee success. Prague enacted a 20% production rebate last summer which paid out $10.5m in its first six months, drawing Paramount’s Mission: Impossible — Ghost Protocol and a handful of other productions.

But while there is no cap to how much each project can receive, the rebate is not bottomless. Producers exhausted the rebate’s 2011 reserve fund of $17.8m in the first five months of the year, effectively disabling the rebate until 2012 when the state budget will inject more liquidity.

The Czech rebate requires projects to pass a broad test for European cultural and production criteria. Among the qualifying productions were Zentropa’s A Royal Affair, Bluebeard Pictures’ Earthworks and Endgame Entertainment’s Wenceslas Square. Plan B’s World War Z had been eyeing a Czech shoot but has opted for Hungary, Scotland and Malta since the Czech money ran out.

Still, the territory remains attractive. After considering Budapest, Jeffrey Chernov, the producer of Paramount Pictures’ Mission: Impossible — Ghost Protocol, brought the production to Prague earlier this year, shooting both at Barrandov and on location in the city.

“The opening act takes place in Moscow, but the prices in Moscow were prohibitive,” says Chernov. “We were able to shoot Prague for Moscow. Plus, we were able to apply the Czech rebate to the Czech crew, equipment and raw film stock we took to [film in] Dubai.”

Chernov worked with Prague’s Still-king Films to access the incentive and navigate the cultural test and says it meant substantial cost savings.

“We definitely had to be overseas. There was nothing [in North America] that would have worked for us. We would have had to go to backlots and construct a lot of streets.”

Case study: A Royal Affair

Zentropa’s $7.9m historical love story A Royal Affair, starring Mads Mikkelsen and directed by Nikolaj Arcel, shot in the Czech Republic for 40 days in the spring. It spent 10 days at Barrandov studios and the rest on location in Prague and around the country.

Why did you choose to shoot in the Czech Republic?

Peter Aalbaek Jensen, producer: The rebate is good but we were looking for added value. The deciding element was the quality of the crews and the infrastructure. This film would not have been possible in Scandinavia. We don’t have the crews to make big historical movies — they don’t have the experience and their working days aren’t long enough.

Where else did you consider?

PAJ: We considered territories further east but they did not have the combination of the rebate, the infrastructure and the crews the Czech Republic has.

What were your cost savings?

PAJ: Had we shot the whole film in Germany, for example, it would have cost twice as much.

Did you bring in crew or use local crews?

PAJ: We brought fewer than 10 Danish crew, mainly department heads. The other 100 or so were Czech.

Which local person or company proved indispensable?

PAJ: Czech Film Commission’s Ludmila Claussova and everyone at Sirena Film, our local co-producer.

What advice would you give to other producers considering a shoot in the Czech Republic?

PAJ: Prepare to be spoiled. The crews are the best in Europe.

Would you shoot in the Czech Republic again?

PAJ: Absolutely. I want to take as many projects there as possible, including one we’re developing about punk music in Denmark in the 1970s.

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