Warning incentives freeze may lead film companies to forget Czechia

A hotly discussed issue at this year’s Karlovy Vary film festival is tax incentives. Producers say the Czech government’s failure to earmark funds for such rebates will ultimately cost the state – and lead international movie and TV companies to look elsewhere. I discussed the situation with Pavel Strnad of Negativ Film Productions at Karlovy Vary.

“Even though we had a record year last year when the volume of productions was close to CZK 12 billion total – out of which 70 percent came from international productions shooting in the Czech Republic – we have a problem with the tax rebate system.

“Because the government didn’t put enough money in the system, now it’s actually closed, since the beginning of January, and we are waiting for the government to add more money, so that the system can run again.”

What will happen if the government doesn’t take that kind of step?

Pavel Strnad | Photo: archive of Pavel Strnad

“I think that will be a total disaster.

“Then I guess we would have to wait until the whole system is transformed into something that can work in the long run.

“I’m afraid that it’s going to take a year, two, maybe three.

“And we can’t wait that long.”

So you’re not optimistic that the government will do what your industry is calling for?

“Well, I hope they will, because I don’t think we can afford to lose so much business, just because of not so much money that the government should add in the budget.

“We’re talking about CZK 400 or 500 million this year – and there’s CZK 9 billion at stake.”

Is it the case, if I understand it right, that the government is talking about limited rebates or incentives for individual films?

“Yes, they suggested a cap for one project which, I believe, is CZK 150 million per project.

“That might affect the huge productions that were coming here, like The Gray Man.

“These big-budget films would be affected, but I think the most important thing in the long run is to find a system that can run without too much hassle around it.

“Because the business is growing, so obviously if you have a 20 percent tax rebate system, you have to adapt to the growing business.”

Filming the Gray Man in Prague  | Photo: René Volfík,  iROZHLAS.cz

Is it the case that Czechia is competing strongly in this area with Hungary in particular?

“Well, we are competing with all European countries, because most European countries now have a tax rebate system, or tax shelter of some kind.

“And actually now the Czech Republic is offering only 20 percent, while other countries are offering 25, 30 or even 37 percent.”

Some people may say, Everybody is having a hard time financially this year – why should the film industry get special treatment?

Illustrative photo: katicaj,  Pixabay,  CC0 1.0 DEED

“This is a system that actually brings in foreign investment and makes money for the state budget, through taxes and secondary effects.

“It’s been proven that it works. It works in all other countries.

“So I think this is kind of an argument that we already had, and I think it’s been proven that tax incentives for film making is worth it.”