The European Commission has planned to review the current criteria used to decide whether public aid for cinematographic and other audiovisual works are compatible with EU rules on state aid. On 14 March, the Commission opened a consultation, which will run until 14 June, about the draft communication it has prepared on the subject and which it intends to adopt in the second quarter of 2012.

The main provisions and criteria laid out in the text include:

- extending the scope of activities covered by the communication to include all phases of an audiovisual work from concept to delivery to audiences

- limiting the spending obligation in the territory granting production support to a maximum of 100% of the aid

- requiring that film production support schemes that base the calculation of the aid amount on the production expenditure in a given territory, such as film tax incentives, treat any production expenditure in the European Economic Area (EEA) as eligible

- the aid is directed to a European audiovisual cultural product and the aid intensity must in principle be limited to 50% of the production budget

- the costs of distributing and promoting European audiovisual works that are eligible for production support may be supported with the same aid intensity as they were or could have been for their production

- aid granted for specific production activities (such as post-production or principal photography) is not allowed.

This is the second and last consultation in the process of revision the current criteria of evaluation of state aid, which will come to an end on 31 December 2012 (an initial consultation was published on 20 June 2011). The draft communication aims to create equal competition conditions between member states and to encourage cross-border productions by taking advantage of the rules of the internal market. One of the objectives is to ensure that the public is being offered a more culturally diverse choice of works.

The communication is available at www.europolitics.info > Search = 310797

Background

EU member states provide an estimated three billion euro per year in film support: two billion euro in grants and soft loans and one billion euro in tax incentives. Around 80% of this is for film production. France, the UK, Germany, Italy and Spain offer the majority of this financial support.

The Commission currently assesses aid for film production according to the state aid rules indicated in the 2001 cinema communication, which is based on Article 107.3(d) TFEU, which allows aid of a cultural character provided that it does not adversely affect competition and trade between member states.