Eastern Europe is well-established as a cheaper alternative to shooting in the US or the UK. But how do international producers choose between the packages on offer' Theodore Schwinke reports

Budapest airport on a Friday night is like the canteen at Pinewood,' says Chris Symes, executive producer of Universal's Hellboy 2: The Golden Army, now shooting at Hungary's Korda Film Studios.

It is a scene repeated at airports across the region as Eastern Europe plays host to an ever-increasing number of high-budget footloose productions in search of authentic locations and ever-more sophisticated, cost-effective studio facilities, and smaller, usually European independent projects.

The Czech Republic, Hungary and Romania, and, to a lesser extent, Bulgaria, Poland, Serbia and Russia, are battling it out to offer the largest amount of studio space, the best facilities and crew, the cheapest costs and the highest tax incentives. The difficulty for international producers is deciding which country offers the best package.

With two new studios and a 20% tax re-bate, Hungary is becoming one of Europe's leading production hubs. In Budapest, director Guillermo del Toro is inaugurating Korda Studios, which offers four new sound stages, with the 111-day shoot of Hellboy 2.

'We'd been thinking about it long and hard and trying to decide where else we could have done this movie for the cheapest price with the technical expertise which is required, and we couldn't really think of anywhere other than Budapest,' says Symes. 'The 20% tax break has an awful lot to do with it.'

Hungary's 20% is presently the only tax rebate of its kind in the region. But other countries are seriously pushing for them to be introduced. In Romania, the government is considering a 16% rebate for foreign film production, and in Bulgaria, Nu Image, which now owns the Nu Boyana studios in Sofia, is lobbying for an incentive and has an ally in Sofia mayor Boyko Borissov.

But the pressure is on, as Western Europe is fighting back. Spain introduces a new tax incentive later this year, and the introduction of rebates in Germany have helped lure Bryan Singer's Second World War film Valkyrie (United Artists) and the Wachowski brothers' Speed Racer (Warner Bros) away from the Czech Republic to Berlin.

The Czech government's response, however, has not been a positive one, and the president has vetoed a new film law. But even without a formalised financial incentive, Prague's infrastructure, locations and professionalism remain appealing, especially to A-list projects. Walden Media's The Chronicles Of Narnia: Prince Caspian and Universal Pictures' Wanted are both shooting in the Czech capital. However, Prague is no longer the bargain it once was.

'Budapest is not especially cheap but it seems to be better value than Prague is right now,' says Symes, who has produced Eragon in Budapest, Alien Vs Predator in Prague and Resident Evil in Berlin.

Czech producers realise what is at risk. David Minkowski, head of production at Stillking Films in Prague and associate producer of Prince Caspian, says: 'The reason Prague has not had more competition to date is that new studios in Hungary opened this month, so now they have tax breaks and studios. In Germany, they had studios but no tax breaks. Now they also have both,' he says.

But even without tax breaks, Eastern Europe remains exponentially cheaper than the US, where budgets are encumbered by union labour. Romania and Bulgaria have the cheapest labour, but not much of it. Producers who do not book crews well in advance can see their savings evaporate as they fly in more and more technicians.

Crews will be in even shorter supply as more stages open. Bulgaria now has the Nu Boyana studios, and Poland is planning a state-funded, 10-stage facility near Warsaw. In Serbia, PFI Studios has opened 42,000 square metres of soundstages. And Sandor Demjan,the majority financier behind Korda,is planning to build another studio in Moscow.

Furthermore, the US dollar is weak across the region, particularly in Prague, where it buys roughly half the Czech crowns it did 10 years ago. In Budapest, recent gains of the forint against other currencies has also been a rude awakening. But producers protect themselves by buying ahead early or by setting prices with most service providers in euros.

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