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Czech authorities plan tax rebate law for films

2007-08-13

Authorities are preparing to put the Czech Republic on a par with its Central European neighbors by establishing tax exemptions for foreign films - but not before 2009. The so-called "Film Industry Support Code" will be prepared by the Czech government this fall and winter.

For over a decade Prague was the darling of foreign investors because of its historical monuments, useful exteriors and low prices for rent and labor. But lately it's been losing out to Hungary, Romania, Bulgaria and even Ukraine. The main reason is the lack of tax incentives in the Czech Republic.

In 2003, major Hollywood studios spent about 5 billion crowns (€179 million). In 2006, the figure dropped to 1.4 billion crowns (€50 million) according to figures provided by the Czech Association of Film Producers (www.associaceproducentu.cz). And the figure will be even lower this year.

For example, Universal Pictures (www.universalpictures.com) was in negotiations to shoot the sequel to its 2004 hit Hellboy, but was lured instead to Hungary where it's filming Hellboy 2 at the newly opened Korda Studios (www.kordastudios.org).

"Director Guillermo del Toro was very satisfied with the Czech locations while shooting the first Hellboy, so we automatically expected his return with the second movie," says Peter Keller from the Czech film company Starlite (www.starlite.cz), which co-produced Hellboy in 2004 in Prague.

In other countries, Hollywood filmmakers can expect a rebate of up to 20% of every dollar, euro or pound spent in that country.

"The Czech Republic is still well known for its high-quality professionals at Prague Barrandov Studios and also for its unmatched historical locations," says Radomír Dočekal, executive director of the Czech Association of film producers. "[But] nowadays, even Germany is cheaper than the Czech Republic for Hollywood filmmakers."