Lithuania Embraces Film Tax Incentive Scheme


    VILNIUS: The Parliament of the Republic of Lithuania adopted the amendments to the Law of Corporate Income Tax on 13 June 2013, clearing the way for a film tax incentive scheme to encourage business investments in the film sector.

    The new film tax incentive scheme, scheduled to begin on 1 January 2014 and run through 31 December 2018, establishes favourable conditions for the business investment into film production, with both foreign and local producers filming in Lithuania able to benefit from the scheme.

    Rolandas Kvietkauskas, the head of the Lithuanian Film Centre, said, “ These changes are important to the film industry and the business sector. The new tax incentives scheme is an opportunity for the profitable companies to support film production and reduce their corporate income tax at the same time. This scheme shall become an additional source of financing to the existing State aid mechanism and revenues out of value added taxes for the film distribution and exhibition in the film theatres.” 

    The Lithuanian Film Centre will administer the scheme. A Commission of experts will determine if the film meets at least two of five cultural criteria. Precise procedures for applying the scheme will be determined once the secondary legislation is adopted.

    Tax relief will be granted to a Lithuanian or foreign entity acting through a permanent office that has provided a donation to a film producer for the production of a film in Lithuania. The direct beneficiaries of the tax relief must be entities with Lithuanian corporate tax liability, including foreign entities or citizens acting through a permanent office or a permanent base in Lithuania or individuals with income tax liability in Lithuania. 

    At least 80% of all the expenses for the film or its partial production incurred in the Republic of Lithuania and the expenses incurred in the Republic of Lithuania must be at least LTL 150,000 (43,443 EUR). The aggregate maximum amount of the donation funds provided should not exceed 20% of the production costs of the film or its part.