Spain has a long tradition of big international shoots. More recently, there’s been a production renaissance: “Wrath of the Titans,” “Game of Thrones,” “House of the Dragon” and “Vampire Academy,” among many others, have chosen Spain. One key driver is tax incentives.
Tax breaks were raised in March 2020 when the government established a new rate for Spain’s mainland of a 25%-30% deduction on spend for both rebates on international shoots and credits for Spanish co-productions.
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No less important, the incentive cap per shoot was raised from €3 million ($3 million) to $10.1 million. The minimum production budget to trigger incentives was set at $2.02 million; a $1.01 million minimum expenditure in Spain qualifies a shoot for incentives. At the same time, the Canary Islands established a 50% tax rebate, with a $19.4 million ceiling.
Navarre, with its own taxation, offers a 35% fiscal credit, requiring a minimum lensing time in the region and allowing a $5.4 million maximum tax deduction. Bizkaia in the Basque Country recently made waves announcing E.U. approval for an up-to-70% tax incentive for films or series shot in the Basque Country province, with no cap on breaks. The Basque Country’s Guipuzcoa offers a 35% fiscal credit, Alava a 25% return. Incentive caps are $10.1 million in both cases.
To tie down the country’s tax advantages, it is essential to hire a Spanish service production company — subsidiaries of top international production houses in the country are not eligible for tax incentives.
Once a production service agreement has been signed, the service company, besides guaranteeing the completion of the shoot, will be well acquainted with applicable legislation and further necessary procedures. The service company requests the tax incentive within its corporate income tax, which must be completed within six months following the end of the fiscal year in which the last production expense is incurred.
When the Spanish service company receives a rebate from Spain’s Tax Agency, it will pay it to the foreign production company in a time period established by contract. In general, the rebate is returned six-18 months after the end of production in Spain.
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