The present article constitutes an amendment of my article “The New Legal Framework in Greece about Cash Rebates for the Production of Audiovisual Works” dated 16.04.2018 (available here), which provided a brief and general outline of the legal framework in Greece about the state aid scheme for the production of audiovisual works in Greece based on the incentive of a cash rebate of a percentage of the eligible costs of the production incurred within the Greek territory.
The present amendment is essential, as the new law 4563/2018 (published in Government’s Gazette vol. Αno. 169/20.09.2018), makes several important changes in order to make the investments in audiovisual works in Greece more attractive.
- THE LEGAL FRAMEWORK
The law 4487/2017 (as amended with the law 4563/2018) inter alia provides proceedings for a financial state aid that intend to encourage the production of audiovisual works in Greece by a cash rebate of 35%of the eligible costs incurred in Greece. The provisions of the law were specified by the joint ministerial decision 923/23.03.2018 (published in Government’s Gazette vol. B no. 1138/28.03.2018). The law 4487/2017 has been issued under the provisions of the EU Regulation 651/2014 (Block Exemption Regulation) that has declared several types of state aid as compatible with the common market and the EU law according to the articles 107 and 108 of the Treaty (the Regulation in article 54 includes specific provisions for aid schemes for audiovisual works). Therefore, the provisions of the Regulation are also applicable.
- THE SCOPE
The state aid refers to audiovisual works including films, episodes of TV series (each episode constitutes a separate audiovisual work), documentaries, animation and video games.
The following audiovisual works are excluded: i)filmed performances such as theatre, opera, dance, music; ii)sports broadcast; iii)TV or phone games, betting, contests, lotteries etc; iv)news and information broadcasts; v)entertainment shows, talk shows and TV interviews; vi)advertisements, teleshopping; vii)porn; viii)presentation and promotion of corporate, entertainment and cultural activities; ix)purely educational programs, tele-education and tele-information broadcasts; x)programs that insult the human dignity and programs that promote discriminations.
- THE CASH REBATE
The cash rebate is provided by the Greek State as a state aid and it is the 35% of the eligible costs, without any upper limit(before the amendment with the law 4563/2018, the cash rebate was 25% of the eligible costs and up to €5,000,000). The amount of the rebate does not increase the business income and it is not taxable.
Subject to the conditions of the law 4487/2017, the cash rebate can also be combined with other state aid or EU aid (e.g. the CREATIVE EUROPE program).
The beneficiary of the state aid can be a)an enterprise which is established or has a branch in Greece and has as a purpose the production of audiovisual works or the production of audiovisual works in the framework of international productions; b)a foreign enterprise of production of audiovisual works if, for the purposes of law 4487/2017, it contracts with an enterprise established or has a branch in Greece and has as a purpose the production of audiovisual works or part of them.
- THE PREREQUISITES
A prerequisite for the cash rebate is in principle that the amount of the eligible costs that are incurred in Greece is at least €100,000. However there are some exceptions: i)The new law 4563/2018 provides that in the case of production of an episode or a seasonof a TV series, mini-series, documentaries and animation, regardless of the duration, the minimum eligible costs must be €30,000 per episode (however, in the case of production of a part of the episodesof a TV series, mini-series, documentaries and animation, regardless of the duration, the minimum eligible costs must be at least €100,000 for the total of the parts); ii)the eligible costs regarding video games must be at least 60,000€.
Furthermore a cultural test is set with the fulfillment of cultural criteria, so that the audiovisual work can be evaluated as a “cultural product” (see also article 54 par. 2 of the Regulation 651/2014 according to which: “Aid shall support a cultural product. To avoid manifest errors in the qualification of a product as cultural, each Member State shall establish effective processes, such as selection of proposals by one or more persons entrusted with the selection or verification against a predetermined list of cultural criteria”).
The evaluation of the audiovisual work as a “cultural product” is based on a point system, similar to the systems that are implemented in the most EU states. For an audiovisual work to be eligible for the cash rebate it must gather a minimum number of points (e.g. a film-fiction- must gather at least 20 in total of 50 points). For example in films or TV series (fiction) the point system is based on: a)the content (e.g. if the story takes place in Greece, if it refers to the Greek or European history, if the screenplay is based on a Greek or European literary or other work, if the story uses places that highlights the variety of the nature, architecture and history of Greece, if there are Greek characters, if the language is Greek or other European language, if the screenplay promotes the arts, the use of new technologies, the culture, the human values, the social and racial integration), b)the crew (Greek or European director, writer, producer, actors, composer etc), c)production (indoor and outdoor shouting in Greece and their duration, final cut in Greece, image or sound procession in Greece, music recording in Greece).
- THE ELIGIBLE COSTS
The eligible costs are the costs for the production of the audiovisual work that are incurred in Greece and they cannot exceed the 80% of the total cost of the production. The eligible costs include the costs for royalties, screenplay, music, services connected directly with the production (such as residence, meals, transfers, lease of equipment, studio, post-production services), salaries, material supply, development, production and tests of video game software.
For the calculation of the total eligible cost of the production the law sets the following restrictions: a)the insurance premiums and the guarantee costs are calculated in total and the maximum eligible cost is up to 5% of the total eligible cost of the production;b) the cost for the royalties of screenplay and music and the fees of the director, the screenwriter, the two leading actors and the producer are calculated up to 25% of the total eligible cost of the production; c)the costs for financial assets, fixed assets and their depreciations such as technological equipment, buildings, borrowing cost, bank expenses are not calculated for the total eligible cost of the production; d)the costs of marketing, promotion and communication are not calculated for the total eligible cost of the production.
- THE PROCEDURE
The competent public organization regarding the applications is the National Center of Audiovisual Media and Communications (“E.K.O.M.E.”). Up to sixty (60) days before the beginning of the production, an application and the documentation required by the law are submitted by the beneficiary online. Within fifteen (15) business days from the application E.K.O.M.E. checks the completeness of the application and the documentation. If they are complete, a Committee under E.K.O.M.E. examines their legality. The legality check has to be completed within thirty (30) days from the completion of the completeness check. Subsequently, a Ministerial Decision is issued declaring that the project is under the aid scheme.
The terms of the above decision can be altered after a relevant application of the beneficiary until the completion of the project.
Furthermore, the above decision can be revoked in case the project does not meet the prerequisites of the law.
The project that is under the aid scheme, is audited by an Auditing Body under the E.K.O.M.E. Within sixty (60) days from the completion of the production, an application must be submitted by the beneficiary along with the required by the law documentation for the certification with a Ministerial Decision of the completion of the project.
-The completion of the project cannot exceed three (3) years since the publication of the above mentioned Ministerial Decision.
-At least 60% of the project must be implemented under the condition that the total of the eligible costs made in Greece are the above mentioned in the section 4 of the present.
The Auditing Body checks inter alia the above conditions, the implementation of the law and the documentation and it submits a report to the abovementioned Committee. The Committee checks the report and suggests the issuing of the Ministerial Decision for the completion of the project. The total duration of the final check cannot exceed thirty (30) days from the submission of the application (in case of any shortcomings the duration is prolonged for an additional 30 days).
The Ministerial Decision that certifies the completion of the project is issued within thirty (30) days from the completion of the abovementioned check.
Within two (2) months from the publication of the Ministerial Decision that certifies the completion of the project, the aid is paid.
The law 4487/2017 provides an ambitious state aid scheme, however, as the whole legal framework is very recent, we cannot be certain on how it will be implemented in practice. The further amendments of the law 4563/2018, end especially the increase of the percentage of the cash rebate to 35% of the eligible costs and the elimination of the upper limit of 5,000,000€, seem to make the whole scheme even more attractive for future investors in audiovisual works in Greece.
Nevertheless, the cash rebate of 35% of the eligible costs of the production provides a significant incentive that may encourage domestic and foreign investors to use the unique natural and historical sites of Greece and the highly expertized Greek personnel for the production of audiovisual works. The cash rebate schemes are widely used internationally and they seem to be fruitful, having a positive impact on the production of the audiovisual works in the states where they are implemented (according to the explanatory statement of the law 4487/2017, these schemes are the most common both among the EU states and internationally and it is proved to be the most effective in attracting international audiovisual productions).
In addition, the procedure of the aid scheme seems not to be very time consuming, taking under consideration the short deadlines that the law sets for every step of the procedure.
Furthermore, according to the explanatory statement of the law 4487/2017, the procedures outlined are transparent and objective, as they constitute an automatic rebate mechanism. It must be noted that the cultural criteria set in the point system seem to be quite broad so it seems possible for a wide variety of audiovisual works to be considered eligible for the state aid scheme.
To sum up, the legal framework provided for the state aid of the law 4487/2017 seems to be in accordance with similar effective foreign state aid schemes of cash rebate and it has the dynamic to make Greece a competitive and appealing destination for the production of audiovisual works.