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The European Commission (in its resolution of July 11, 2018) approved the modification of the Hungarian film support scheme. The Commission not only approved the extension of the scheme until December 31, 2024, but accepted the proposal to increase the level of tax rebate from 25% to 30%. The related legislative changes are expected to be proposed and submitted to the Hungarian Parliament in the coming days, which may give a further boost to the competitiveness of the Hungarian film industry.

Except for the increased rate of the available rebate, other regulations relating to the tax rebate rules (e.g. scope and limitations on qualifying production spend) will not change now (certain changes in the film support mechanism may, however, be expected in the autumn this year). Accordingly, thanks to the increase of the tax rebate from 25% to 30%, the effective benefit on Hungarian local eligible spend increases from 31.25% to 37.25% (since the Hungarian local spend not only entitles the production for the 25% tax rebate, but also increases the potential amount of eligible foreign spend). In the case of foreign cast and crew cost (which is subject to 50% limitation) the overall gain increases from 15.625% to 18.75%.

In order not to cause adverse effect on those film productions the applications of which are not yet assessed by the National Film Office (NFO), and to apply the increased level of support as widely as possible, the 30% tax rebate would be applicable in the case of those film productions that submits their request for entitlement to film support to the NFO on or after June 11, 2018 (i.e. 30 days before the decision of the European Commission).

The increase of the tax rebate to 30% makes also the raise of the state support necessary. Therefore, the budget for tax rebate approved by the EU has increased to HUF 50 billion/year.

Because of the amendment, the budget of the collection account operated by the Hungarian National Film Fund (HNFF) – for the purpose of collecting tax contributions from corporations to finance the tax rebate for films – will likely to be increased proportionally, too. Nevertheless, the surplus amount currently available on the collection account (approximately HUF 5.6 billion as of today) most likely is sufficient to satisfy even the increased demands for the time being, and therefore, the budget for 2018 most likely remains unchanged.