State aid for the audiovisual market is more broadly acceptable under the EU law

Providing aid using public funds for entrepreneurs is prohibited, except for strictly defined cases. For the audiovisual sector however, new opportunities have appeared.

In accordance with EU law, as a rule, providing aid to entrepreneurs using public funds is prohibited, except for strictly defined cases, laid down in EU law and in the practice of the European Commission. A significant part of the cultural activities carried out for commercial purposes is considered a form of economic activity. As a result, public financial support for commercial activities in the field of culture is considered state aid.

In practice, this means that such support may be granted in accordance with EU law, if (i) the amount does not exceed PLN 200,000 in a period of three fiscal years (de minimis aid) (ii) if it meets the conditions set out in the Regulation No. 651/2014 of 17 June 2014 declaring certain categories of aid compatible with the internal market pursuant to Articles 107 and 108 of the Treaty (GBER Regulation), or (iii) it is approved in advance by the European Commission, including on the basis of the principles outlined in the Guidelines on state aid for films and other audiovisual works either directly, or on the basis of the Treaty on the Functioning of the European Union (TFUE).

GBER Regulation good for the audiovisual sector, but excluding video games

In the case of the audiovisual sector, only in 2014 appeared the possibility of an aid (in the amount exceeding the de minimis threshold) without the obligation of prior notification of the aid to the European Commission. Support for the audiovisual sector was in fact explicitly provided for in the GBER Regulation (article 54), which has been in force since 1st July, 2014 and replaced the previously existing Regulation 800/2008 (which did not provide for a separate exemption for aid for the production of audiovisual works).

This means that, subject to the conditions of the GBER regulation, the producers of audiovisual works can apply for aid for the production of audiovisual works, without prior notification of the aid by Polish authorities. In this regard, however, it is necessary to observe the following limits: EUR 50 million per project per annum (the intensity of aid for the production of audiovisual works does not exceed 50% of eligible costs, and in certain cases the aid intensity can be increased). In light of the practice of the European Commission, the support for video games has been excluded from the audiovisual sector.

In accordance with the GBER Regulation the aid may take the following forms:

1. aid for the production of audiovisual works;
2. pre-production support, and;
3. distribution support.

The eligible costs shall include:

• in the case of aid for the production: the total cost of production of audiovisual works, including the costs of improving accessibility for people with disabilities;
• in the case of aid audiovisual production: the cost of developing the script and the development of audiovisual works;
• for distribution support: the cost of distribution and promotion of audiovisual works.

Public financing

In addition, as before, within the framework of the GBER Regulation (though under other the categories of aid, rather than aid for the production of audiovisual works), producers may receive a grant for the construction of infrastructure including, among others, facilities for film and television production. Such investments can be financed from public funds without an obligation to notify to the European Commission, if the investment meets the conditions set out in the GBER Regulation. For example, aid may be granted under regional investment aid for the initial investment for a new business, if the aid does not exceed certain aid thresholds requiring the notification of the aid to the European Commission.

Based on the GBER Regulation, investment aid for the construction of local infrastructure is also possible, which covers infrastructure, contributing at the local level to improve the business environment and consumer environment and modernizing and developing the industrial base (threshold of support: EUR 10 million or when total costs exceed EUR 20 million for this infrastructure).

The entity responsible for policy coordination in the audiovisual area is the Ministry of Culture.

In the case of aid schemes whose design and preparation is done at the local level, the entity to which you can turn to for support in the audiovisual area may be, among others, communes (for example in the form of exemption of real estate tax).

Additional aid provided funder the GBER Regulation can pose an alternative to other instruments of public funding (e.g. as part of programs involving EU funds) to the extent that these programs do not sufficiently meet the needs of producers of audiovisual works.

Of course, beneficiaries may also be eligible for support for film production by the Polish Film Institute, as before. The program of funding film production by the Institute has been approved by the European Commission.