The government of the Republic of Cyprus has implemented a set of incentives to attract international producers to choose Cyprus as their filming location. These incentives include the option for production companies to receive either a cash rebate or a tax credit, as well as tax discounts on investments made in equipment and infrastructure.
The eligible categories for productions include feature films (including animations), reality shows, television films or series (including animations), and creative documentaries.
The Film Scheme has been developed in accordance with the Commission Regulation (EU) 651/2014, which declares certain types of aid compatible with the internal market. Specifically, it aligns with Article 54, which focuses on aid schemes for audiovisual works to promote European Culture, and Article 17, which addresses investment aid for small and medium-sized enterprises. The Film Scheme combines grants and tax incentives to support these productions as follows:
1. Cash Rebates:
The maximum amount of aid that can be received is 45% of eligible expenditure below the line (as defined in the Scheme) and 25% of eligible expenditure above the line (as defined in the Scheme). This aid must be incurred in the Republic of Cyprus. The minimum expenditure required, as long as it does not exceed 50% of the total production budget, is:
- 200,000 Euros for feature films (long films)
- 80,000 Euros for audiovisual productions eligible under the Scheme.
At least twenty percent (20%) of the total expenditure budget must be spent on activities within the Republic of Cyprus.
The production must also meet a cultural test criterion in order to promote culture at a local, European, and international level.
2. Tax Credit:
This measure provides assistance to the applicant in the form of a reduction in corporate tax. The maximum aid available is 35%, while the minimum aid is 25% of eligible expenditure both below and above the line (as defined in the Scheme). The minimum expenditure required, as long as it does not exceed 50% of the total production budget, is:
- 200,000 Euros for feature films (long films)
- 80,000 Euros for audiovisual productions eligible under the Scheme.
The total amount of tax credit cannot exceed 50% of the production’s total taxable yearly income. The tax credit can be carried forward for up to five years, as long as it does not exceed the 50% limit.
3. Tax Deduction – Investments in Infrastructure and Equipment:
Small and medium-sized enterprises that invest in filmmaking infrastructure and equipment may qualify for a deduction of their investment from their taxable income. This applies to any applicant who invests in film production infrastructure and technological equipment, such as filming studios, audiovisual processing facilities, filming equipment, digital audiovisual means, and so on.
The amount of aid provided cannot exceed 20% of eligible expenditure for small enterprises and 10% for medium-sized enterprises. To be eligible for the tax allowance, the equipment must remain in Cyprus for a minimum of 5 years.
While Cyprus offers significant tax incentives for the Film Industry, it is crucial for production companies to receive accurate legal information and guidance to ensure they meet all the requirements of the Cyprus Filming Scheme. This assistance and support are essential for ensuring the success of the movie.
Please feel free to contact our Team directly for more information or assistance you may need.