Introduced last year, and effective from 1 January 2016, the new incentive offered by the Serbian government is essentially a refund of 20% of the qualifying spend incurred by an investor – either an individual or a company – in relation to the production of an audiovisual work in Serbia.
Conditions for Applying The incentive applies to feature films, documentary films, TV films and animated films intended for broadcast with a minimum length of 70 minutes. In addition, TV series containing at least three episodes and documentaries fall within the scope of the incentive, provided they have a minimum length of 40 minutes.
Notably, no cap on the amount that can be claimed is set out in the legislation; however, the following minimum spends apply:
- Feature film, TV film or TV series: €300,000
- Animated film or co-production: €150,000
- Special purpose film: €100,000
- Documentary film: €50,000
Certain content restrictions apply, including that the audiovisual production must not discredit Serbia or involve ‘immoral content’ or promote the breaching of human rights or hate speech. It remains to be seen how widely this particular provision is interpreted.
The investor claiming the incentive must not have outstanding tax liabilities in Serbia or be subject to any bankruptcy or liquidation procedure.
Costs incurred in Serbia for the production of an audiovisual work, including purchased goods and services, location costs, staff costs (for staff who are resident in Serbia), and equipment and rental costs all fall within the remit of the incentive scheme.
The following costs are not covered by the scheme: marketing costs, costs relating to the purchase of land, and payments of VAT which have been, or are to be, refunded in any jurisdiction. The Minister for Economic Affairs is to provide a comprehensive list of qualifying and non-qualifying costs in due course.
Application Procedure A Commission is to be established to allocate incentives under this new legislation. Applications must be made to this Commission and a plethora of supporting documentation must be submitted alongside the request, including a synopsis of the audiovisual work, a production calendar and a production budget overview. Proof must be provided that at least 30% of the production budget is to be spent in Serbia. Significantly, the request and supporting documentation must be delivered in Serbian or with an attached certified Serbian translation.
The Commission will decide whether the necessary conditions are met within seven days of the submission of the above request.
In order to progress the request, the investor will then be required to enter into a contract with the Ministry for Economic Affairs, which will set out various ongoing obligations that must be met in order to continue to be eligible for the incentive. These include, but are not limited to, an obligation to inform the Commission of any changes to the filming schedule, and weekly submission of call sheets and production reports. Only if all obligations are satisfied will the Ministry pay the incentive.
Once production is completed the investor has 45 days to submit a request for payment to the Commission. Further documentation is to be submitted at this stage, including, but not limited to, an independent auditor’s report on production costs, a list of film and acting crew, and evidence of all funds spent.
The incentives can only be paid into a Serbian bank account belonging to the investor, and will be paid within 60 days of a final decision being made.
Additional Practicalities An audiovisual work that has received the benefit of the incentive detailed must display in a prominent place, in all version and copies, a statement to the effect that ‘the Republic of Serbia’ has financially supported the production of the work.
Future Developments The Ministry of Economic Affairs is currently finalising official guidance.
Client Alert 2016-001