- 1Spain: An attractive country for investment
- 2Setting up a business in Spain
- 3 Tax System
- 4 Investment aid and incentives in Spain
- 5 Labor and social security regulations
- 6 Intellectual property law
- 7Legal framework and tax implications of e-commerce in Spain
- AI Annex I Company and Commercial Law
- AIIAnnex II The Spanish financial system
- AIIIAnnex IIIAccounting and audit issues
- State incentives for training and employment
- State incentives for specific industries
- Incentives for investments in certain regions
- Aid for innovative SMEs
- Preferred financing of the Official Credit Institute (Instituto de Crédito Oficial or ICO)
- Internationalization incentives
- EU aid and incentives
- European Investment Bank (EIB)
- European Investment Fund (EIF)
- European Structural and Investment Funds
- The funding policy of the Common Agricultural Policy (CAP)
- European Maritime and Fisheries Fund (EMFF)
- European Union Research and Innovation Programs
- Community initiatives in favor of corporate finance
3. State incentives for specific industries
3.3. Audiovisual industry
One of the priority objectives of Cinema Law 55/2007 is to bolster the promotion and development of the production, distribution and showing of films and audiovisual works, as well as to establish terms favoring their creation and dissemination and to adopt measures for the preservation of film-making and audiovisual heritage.
Apart from the tax incentives applicable to the film-making industry, the following are some of the main incentives included in the Cinema Law, as well as in Order CUL/2834/2009, of October 19, 2009, and in Order CUD/769/2018 of July 17, 2018, setting forth the rules for applying Cinema Royal Decree 1084/2015, of December 4, 2015 (regulatory implementation of Law 55/2007), in connection with the acknowledgement of film costs and producers’ investments, the establishment of the terms of reference for state aid and the structure of the Administrative Register of Cinematographic and Audiovisual Enterprises.
In general, motion pictures or other audiovisual works, including those made under the regime for co-production with foreign companies, which intend to benefit from these incentives, must either have Spanish nationality or be in a position to obtain it by meeting the requirements for access to Spanish nationality pursuant to article 5 of Law 55/2007, of December 28, 2007 (RCL 2007, 2384). In this connection, works made by a Spanish production company or a production company from another EU Member State established in Spain, which had previously obtained the appropriate certificate from the competent body, are deemed to have Spanish nationality.
In the case of works made under the regime for co-production with foreign companies, incentives are available only to the Spanish co-producer or co-producer with registered office or permanent establishment in Spain, for the Spanish participation in the co-production.
In fact, one of the obligations imposed, in general, on all beneficiaries is to have their legal residence or establishment in Spain at the time of the actual receipt of the aid.
When the eligible activity is to be carried on jointly by various legal entities, in order to obtain the status of beneficiaries they must form a grouping of companies that will act through a designated representative entity with power of attorney to act in the name and for the account of all members of the grouping, not only for the purpose of submitting the aid application and the supporting documentation, but also for the performance of the obligations resulting from the grant of the aid and its justification. The grouping can therefore not be dissolved until the statutes of limitations on recovery action and on the infringements envisaged in the General Subsidies Law have lapsed.
The structure of the aid system is as follows:
Creation and Development
Line of aid
Eligible for aid
Maximum amount (€)
|Scriptwriting of full-length motion projects.||Projects for the preparation of full-length motion picture scripts which comply with the terms of the call for aid applications.||€40,000 per project with a maximum of 15 grants of aid per call.|
|Development of full-length motion picture projects.||The expenses need to develop the projects (improve the script, search for locations, identification of cast, initial sales plans, etc.).||It cannot exceed €150,000, provided that such amount does not exceed 50% of the budget for developing the project or of the producer’s investment. The cost of the aid will be discounted from the cost of the motion picture when determining the producer’s investment (significant data for other forms of aid).|
|Cultural and non-regulated training projects.||Projects which are capable of enriching the Spanish audiovisual panorama from a cultural standpoint: (i) investigations or publications with particularly relevant content for the Spanish cinema and audiovisual industry or (ii) specific programs aimed at training the public.||The call will establish the maximum amount which may not exceed 60% of the project’s budget. Receiving this aid is compatible with other public aid or subsidies.|
|Line of aid||Eligible for aid||Maximum amount (€)|
|Production of full-length motion pictures projects.||General.||Projects with proven cultural nature in a position to obtain Spanish nationality.||The maximum amount of the aid will be established in the call, within the annual credit allocated to the aid, which can be up to €1,400,000, provided that this amount does not exceed 40% of the cost acknowledged to the full-length motion picture by the Institute of Film-making and Audiovisual Arts (Instituto de Cinematografía y de las Artes Audiovisuales or ICAA).
A minimum of 8% of the budget will be reserved for animation projects that attain the minimum points established in the call. The part of the credit not used, if any, will again be transferred to the general line.
|Selective.||Projects (i) of special cinematographic, cultural or social value; (ii) for a documentary; (iii) incorporating new producers, (iv) or of an experimental nature.||The call for aid applications will stipulate the maximum amount of the aid which, within the annual credit used for them, can be up to €500,000, provided that such amount does not exceed 40% of the project’s cost recognized by the ICAA.
Not less than 15% and not more than 25% of the annual credit must be reserved for projects for a documentary. Of the rest, a minimum of 8% must be reserved for animation products, and up to 10% may also be reserved for experimental projects.
In the case of experimental projects, the maximum amount of the aid per project can be equal to the percentage of the cost acknowledged by the ICAA related to the applicable maximum intensity.
|Production of TV movie and documentary projects.||TV movie and documentary projects which are longer than 60 minutes and shorter than 200 minutes, and which are not to be shown in movie theaters, provided that, among other requirements, they are filmed on photochemical medium or high definition digital medium. For a project to be eligible for aid, there must be a contract or a statement of interest in the project from one or more radio or television broadcast service providers.||Calculated by applying the appropriate percentage, according to different tranches, to the amount of the budget (which cannot be less than €700,000), with maximum annual credit of €300,000, provided that such amount does not exceed the independent producer’s investment or 50% of the budget.|
|Production of animated series projects.||Animated series projects. For the project to be eligible for aid there must be a contract or a statement of interest in the project from one or more radio or television broadcast service providers.||It cannot exceed €500,000 for budgets exceeding €2,500,000, and €300,000 for budgets of lower amounts. In both cases, said amounts cannot exceed the independent producer’s investment or 60% of the budget.|
|Production of short film projects.||Short film projects.||Its amount can be equal to the percentage of the cost acknowledged by the ICAA related to the applicable maximum aid intensity. Compatible with aid for the production of completed short films, although the sum of the two types of aid cannot exceed the maximum ceiling of €70,000 per beneficiary film.|
|Production of completed short films.||Completed short films.||Its amount can be equal to the percentage of the cost acknowledged by the ICAA related to the applicable maximum aid intensity. Compatible with aid for the production of short film projects, although the sum of the two types of aid cannot exceed the maximum ceiling of €70,000 per beneficiary film.|
|Line of aid||Eligible for the aid||Maximum amount (€)|
|Distribution of Spanish, Community or Latin American films.||Distribution of full-length films and series of short films, where, in the case of foreign films, less than 2 years have elapsed since they opened in the country of origin, which were destined for distribution in movie theaters, their opening complying with the conditions established in the call.||The aid may subsidize up to 50% of the cost of the making of copies, subtitling and dubbing, advertising and promotional expenses, anti-piracy measures and the technical means and resources invested in order to prepare the film for persons with disabilities. For the purpose of this aid, the aforesaid costs cannot be subsidized where they have been acknowledged, in whole or in part, as an expense attributed to the producer.
Nonetheless, the maximum amount of the aid cannot exceed €150,000 per full-length beneficiary film or group of short films.
In any case, the amount received by a company within the same budgetary year cannot exceed 20% of the amount to be used in said year for this line of aid.
|For the preservation of cinematographic heritage.||Making of duplicates necessary to guarantee the preservation of cinematographic and audiovisual works and their original media, for the production companies or owners of films which undertake not to export for at least 10 years the original negative of the films and. among other requirements, deposit the related medium with the Spanish Film Library.||The maximum amount of the aid cannot exceed €6,000, and the amount of each grant of aid cannot exceed 50% of the cost of making such duplicates as are necessary to perform the preservation function.|
|For promotion.||For the participation of Spanish films in festivals.||Participation of films that have or are in a position to obtain Spanish nationality in festivals and award ceremonies of recognized prestige.||To be determined in each call for aid applications. The call will stipulate the eligible expenses, between those inherent in the Spanish film’s participation in the events for which it was selected or to which it was invited and the minimum percentage that must necessarily be used for advertising expenses, as well as, within what is available in the budget, the total amount to be used for such aid and the maximum amounts for each one of the festivals and, as the case may be, sections and for each award.
The aid cannot exceed the cost incurred by the producer on its participation in the festival or on competing for the award.
|For the organization of film festivals and competitions in Spain.||Organization and holding of film festivals or competitions of recognized prestige in Spain, and which devote special attention to the programming and dissemination of Spanish, EU and Latin American cinema, animated films, documentaries and short films, provided that at least two consecutive editions of those festivals or competitions have been held in the three years preceding the date of publication of the call for aid applications.||To be determined in each call for aid applications. The aid cannot exceed 50% of the budget submitted for their organization and holding.|
|For the production of audiovisual works using new technologies.||Production of audiovisual works which use new technologies in the audiovisual and cinematographic field and are distributed using any electronic means of transmission which allows for the broadcast and receipt of both image and sound other than as transmitted for movie theaters, television or domestic videos.||The maximum amount of the aid cannot exceed €100,000, provided that such amount does not exceed 50% of the project’s budget.|
Please note, however, that according to information furnished by the Ministry of Culture and Sports, various amendments to Order CUD/769/2018, of July 17, 2018 and to Royal Decree 1084/2015, of December 4, 2015, mentioned above, are currently being prepared and, therefore, the characteristics of the aid described could be changed on the medium-term. According to the available public information, one of the most notable features of the legislative reform consists of what is known as the “50/50 Action Plan”, aimed at favoring a larger and better incorporation of women in the audiovisual sector, including measures such as the reservation of 35% of the aid budget for films directed by women.
Notwithstanding the foregoing, we cannot forget that the ICAA is authorized to set up cooperation agreements with banks and other credit institutions with a view to facilitating and extending the financing of production, distribution and projection activities, technical industries and the video-making sector and for the development of infrastructures or the technological innovation of those sectors.
This financing alternative is materialized in various types of aid:
- Aid for reducing interest on loans granted for production aimed at facilitating cinematographic production activities for production companies which had not received aid for the production of full-length motion picture projects.
- Aid for reducing interest on loans granted for distribution and dissemination as film, video and via internet, or the technological renewal of these sectors.
- Aid for reducing interest on loans for the financing of film projection and post-production infrastructures used by enterprises, laboratories, studios and the production and post-production technical industry.
Lastly, please note that, in order to confront the economic impact caused by the COVID-19 public health crisis, a number of contingency measures were approved for companies in the cultural industry by way of Royal Decree-Law 17/2020, of May 5, 2020, including measures specifically in support of film-making and audiovisual arts, which in turn include most notably the following:
- Extension of the time period for the performance of obligations imposed on the beneficiaries of general and selective aid for the production of full-length motion picture projects and of aid granted to short film projects during the 2016-2019 period.
- Greater flexibility for the performance of certain obligations that were to be performed in 2020, for beneficiaries of general and selective aid for the production of full-length motion picture projects in relation, inter alia, to the number of cinemas in which the audiovisual works are to be premiered, as well as the time period in which to commence filming.
- Transitional extension, until cinemas reopen, of the definition of a film’s “commercial premiere”, so that it can mean premieres via television audiovisual communication services, electronic communication services that broadcast television channels and program catalogue services.
- On an exceptional basis, possibility for the interested party to request the payment of 50% of the general aid granted for the production of full-length motion picture projects, without having reported the commencement of filming to the ICAA or to the competent autonomous community body.
- Grant of direct subsidies to the owners of cinemas that are duly registered in the Register managed by the ICAA, to be used to defray, inter alia, expenses incurred on complying with the health and safety measures imposed on them (staff risk prevention plans, etc.) or holding promotional campaigns for the recommencement of activity. The amount of this aid will be linked to the number of screens that each cinema has (with a minimum of €8,000 if it has a single screen and up to €32,000 if it has more than eight).