Incentives already available! Starting from 19 February 2019, Polish Film Institute is collecting applications for financial support in 2019.
At the foundation of any motion picture, series or animation lies not only the excellent screenplay or the renowned names of their creators, but principally everything starts with… financing. Without this important component even the most interesting ideas and captivating stories are doomed to failure and will not go beyond the development stage. Starting this year, raising funds for the audiovisual production and attracting foreign capital will be much easier.
After substantial success in other European countries that have been using national forms of support for their audiovisual productions, Poland has introduced the new support mechanism – being the reimbursement of 30% of Polish eligible expenditures – also known as cash rebate or incentives. It should be mentioned that incentives are independent of the existing funds available within Operational Programmes, while state aid limits still apply.
Act and Ordinance
Following the introduction of the Act on financial support for the audiovisual production on February 11th 2019,“The Act of 9 November 2018 on Financial Support for Audiovisual Production”. the Ministry of Culture and National Heritage issued a regulation on the detailed list of Polish eligible expenditures, which is the basis for the submission of applications. It includes forms such as: application for a certificate, an application for support, a qualification test, and a final report. Therefore, on 19 February 2019, the Polish Film Institute (PISF), being the operator of the funds, started to accept the applications together with the required attachments for the financial support in 2019.
Which productions are eligible for the Polish cash rebate?
- fiction feature film, not shorter than 70 minutes;
- documentary film not shorter than 40 minutes;
- animated feature not shorter than 60 minutes;
- fiction series with an episode of at least 40 minutes;
- documentary series with a season of not less than 150 minutes;
- animated series with at least 10 episodes and each season of at least 50 minutes.
Who can apply for funding?
The applicant can be not only the producer, but also a co-producer or a company providing services for the given production. Depending on the type of entity applying for the co-financing, the thresholds for the value of Polish eligible expenditures have been established differently, with lower amounts of money for the service providers.
It is also worth pointing out that in 2019, in the group of productions which may be the most popular, i.e. full-length feature films, the threshold of Polish eligible costs was lowered from PLN 4 million to PLN 2.5 million, while in 2020 it was lowered to PLN 3 million. This should be seen as a kind gesture towards smaller productions and a study of the effectiveness of the act in relation to its objectives in the coming years.
Principle: 1 project – 1 grant
Financial support will be granted to the individual productions at a rate of 30% of Polish eligible expenditures. The maximum amount of financial support granted for one project cannot exceed PLN 15 million (rule: 1 project – 1 grant), and the maximum amount of total support granted to one entity cannot be greater than PLN 20 million per year.
The legislator from the beginning emphasised that the purpose of the incentives is to support audiovisual productions, which at the moment are at an advanced stage. Moreover the funds spent as part of the incentive system are expected to return to the state budget in the near future as the investments increase in this sector. Therefore, each applicant is obliged to submit a production financing plan that covers at least 75 % of the total funding. It should be confirmed by enclosing copies of the necessary documents regarding acquired funding to the application. What is important, the applicant must also first bear the costs of the production themselves, which will later be reimbursed by the PISF.
Only an entity registered in Poland may apply for the reimbursement of the expenses incurred. Its owner may be a foreign entity, but the application must be submitted by its Polish branch, which will be responsible for further implementation of the project. Applicant is also required to have experience in production business. This means having at least one audiovisual work in the portfolio which has been distributed in cinemas, broadcasted or made available by a media service broadcaster or presented at an accredited international festival. Optionally, they must employ a person managing the entrepreneurship or a person responsible for the audio-visual production with the proper experience in this field. Analysing the above it can bee agreed that bar is not set too high.
One of the most important elements determining the granting of funding is a positive result (above 23 points) in the cultural test, which is executed on the basis of the content of the work and production assumptions. The purpose of the test is to identify cultural factors and to assess the impact of a given production on the development of the Polish audiovisual industry. High scores are awarded to everything that is Polish and European – cultural heritage and literary work in the field of culture, religion, history and mythology, as well as, currently important topics such as human rights, tolerance, equality and ecology. Up to 17 (out of 44) points in total can be earned for the location of a work’s performance on the territory of Poland, participation in audiovisual production of Polish filmmakers and the use of Polish film infrastructure, including the post-production stage.
Verification of applications
In the course of verification, applications are not subject to evaluation and selection on artistic basis, but to examination at the formal and legal level, and the accuracy of the information submitted. This sends a clear signal so as to eliminate any discretionary treatment in the allocation of funds. The idea behind the whole mechanism is to systematise and simplify the process of granting, transferring and accounting the financial support. This has been achieved by defining specific stages of the process and reducing their duration to a minimum – in most cases to 28 days.
After a positive decision on the application, the PISF will conclude a financial support agreement with the applicant. Then the funds are allocated in defined fiduciary account. The funds deposited in the account may be taken up by the beneficiary only after the submission and verification of the final production report.
Again, time is an important factor – applications may be submitted at the earliest 6 months, and at the latest 2 months before the start of specific works to be covered by the funding, i.e. before the start of the production stage, for which the expenses are to be reimbursed. The aim is to limit the cases where funds are fully allocated in the first months of each year.
An interesting aspect is also the possibility to obtain an optional certificate, valid for 4 years, certifying that the project is pre-eligible for the support. The certificate does not guarantee the receipt of funds, but it is a signal that the producer meets the conditions necessary for the grant. This is intended to make it easier for the producers to find partners for the project as well as further financing.
What is not included in the eligible expenses?
The legislator has also specified a group of costs which are not directly related to audiovisual production and cannot be the subject of financial support. These include, among others, overheads of the producer, representation costs, value added tax, costs of leasing, loans, credits, costs of distribution, promotion and marketing of the work (including making-off, photos and posters), costs of legal, auditing and accounting services if they exceed 3% of the budget of the works to be financed. Attention should therefore be paid to their correct classification in the cost estimate, otherwise the PISF may call on the applicant to modify the cost estimate or may even reject the application.
Millions to be distributed
It is assumed that the annual budget of PISF coming from the state budget and related to the implementation of the Act will ultimately amount to approximately PLN 265 million. The basic principle of the whole mechanism is verification of the applications in the order of submission, until the funds for a given year are fully spent. In 2019, the upper limit of funds was set at PLN 210,738,000, but the final amount has not been estimated yet. However, the indications from the industry are clear – the interest in funds is very high. The Director of the Polish Film Institute has committed to publish weekly information on how much of the annual allocation remains available.
The whole regulation should be assessed as the right and huge step towards the development of the audiovisual sector in Poland.
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