Disney and other majors enjoying tax relief schemes internationally

The act of centralizing productions is, more than ever, out-of-date. Better taking advantage of incentives and other opportunities given by globalization. Hollywood makes no exception to this trend, as studios have started moving out of their Californian facilities, also for big budget feature films, while the golden state is trying to get them back (FYI, California want Hollywood back).

According to an analysis by The Guardian, Disney has earned $272 million in production incentives from the U.K. government, which offers tax breaks for films shot in Britain by film production companies within the UK corporation tax net. Introduced in 2007, the Creative Sector Tax Relief scheme allows film projects with a budget greater than $32 million to claim back up to 25 percent (increased from 20 percent) of the first $32 million of qualifying UK expenditure, then up to 20 percent of their production costs. Qualifying films must pass a cultural test or be an official co-production, intended for theatrical release, and must spend 10 percent (reduced from 25 percent) of their budget in the U.K., with 70 percent of their labor costs going to European workers. Tax relief is available on qualifying UK production expenditure on the lower of either 80% of total core expenditure or the actual UK core expenditure incurred. Most importantly and differently from other systems, there is no cap on the amount which can be claimed.

Together with tax benefits, the Government is investing in specialized labor creation and production facilities such as Pinewood Shepperton studios, which recently received government approval for its long-delayed expansion plans worth $340 million. The “Pinewood Studios Development Framework” includes doubling the existing Pinewood Studios by adding a total of 100,000 square meters of new facilities, including studios and stages, workshops and production offices, to build another 10 stages and create 3,100 new jobs.

The past few years have seen the company ramp up its productions in the country, specifically at Pinewood Studios, which has welcomed the likes of Star Wars: Episode VII, Maleficent, Alice in Wonderland: Through the Looking Glass, Cinderella, Avengers: Age of Ultron and several other major titles from Disney’s Marvel, including recent Guardians of the Galaxy and upcoming Doctor Strange.

Guardians of the Galaxy director James Gunn and character Rocket Raccoon .

Since 2007 Disney has spent a total of $2.3bn on film-making in the UK, including a significant chunk of the $250m production budget of the fourth Pirates of the Caribbean film, believed to be the most expensive in history, which grossed more than $1bn, according to industry analyst Box Office Mojo. Last year Disney’s UK film costs peaked at $531m, around 18% of the $3bn that the studio spent worldwide. The UK’s share was up from 11% in 2012.

Last year, it claimed back $81 million, believed to be the largest ever to a single studio, a third of which was accounted to Thor: The Dark World, another Marvel title shot in Pinewood. Disney has already spent more than $180 million on Star Wars: Episode VII and Avengers: Age of Ultron alone, according to the accounts.

Accounts released this year show that Disney has already spent more than $180m on the Star Wars and Avengers films alone. Other studios are also filming more in the UK. Warner Bros currently has three movies in production there, including one based on the 1960s television series The Man From Uncle, directed by UK director Guy Ritchie.

But some complain the tax relief can backfire as a boost to the British film industry. In November Edgar Wright, the director of British movies Hot Fuzz and The World’s End, said: “While the tax break is good for Hollywood films shooting here, it’s probably not that great for British films shooting in the UK. Some middle-to-low-budget films are going to find themselves without crew because all the American films are shooting here.” Well, we say people must adapt their habits and lives according to economic developments, this is why institutions like European Union were born, that is in order to ensure “free movement of goods, services, capital and persons”.

Pinewood Shepperton studios near London, UK.

Other countries should follow a similar path as creative industry is a strategic sector for connecting cultures within the globalized market. The Italian government, for instance, recently boosted film tax credits available at 25% of qualifying production expenditures for international feature films, going from a cap of $6.7m per project to a cap at $13m per company, whereas the overall tax credit for the cinema and audiovisual industry will increase from $147m to $154m, both kicking in from 2015 and available to television and web content producers too.

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