Production incentives are a central component of the finance plan of nearly all new film projects. This chapter explores the entire U.S and many principal international production incentive programs made available since May 2010.

Production IncentivesThere are several governmental forms e.g., tax incentives, subsidies, and other forms are available supporting both domestic and foreign film production. However, there are also many variables that can impede the process of submitting government forms for currency to produce a film. We recommend using an insurance policy to protect your key investment. The Aon/Albert G. Ruben firm created an exclusive insurance plan that expedites financing films by insuring against the following types of loss:

  • Bankruptcy and insolvency
  • Legislative amendment (rules change before film project is completed)
  • Repudiation (refusal to acknowledge or pay)
  • Protracted default (late pay, issuance of IOUs, warrants, or other illiquid instruments which clog timely repayments to lenders and investors)
  • Additional accrued interest charges
  • Loss of sets and locations
  • Cast or crew accident, illness, disability

About Entertainment Partners

What company specializes in payroll?

For more than 30 years, Entertainment Partners (EP) outpaced the competition in payroll and production services for the entertainment industry. EP is an employee-owned business. Leading the pack among accounting agencies is EP’s Virtual Production Office (VPO). VPO is a Web based application that is a warehouse for a variety of production documents. EP’s Budgeting and Scheduling are the industry’s standard productivity software products. Casting/payroll for background actors is managed through their Central Casting division. EP offers comprehensive expert advice in addition to providing a vast array of key services on their webpage.

Production Incentives Overview

What Are Production Incentives? Where Are They Available

Production incentives are funding resources for film production. They can be cash, rebates, tax credits, or up-front/back-end documents. Rules governing production incentives is jurisdiction specific.

Why Are They Granted?

Incentives, created and used by governments, foster economic growth, build infrastructure, and to create jobs. Incentives attract industries to local communities.

Types of Incentives

What Is a Production Rebate?

A rebate, sometimes called grant, is a partial refund given to a qualifying production company that overpaid on the amount of qualifying expenditures. It may also be used when jobs were created in the jurisdiction on a qualifying project. Tax return forms are not needed for rebates/grants.

What Are the Different Types of Tax Credits?

Tax credits fall into one of four categories: refundable, nonrefundable, transferable or nontransferable.

Refundable tax credits behave nearly identically to production rebates except that the taxing authority manages these credits for companies under their jurisdiction. One final difference is that the company receiving a refundable tax credit must file a tax return. At times, banks or other lending organization may monetize a refundable tax credit allowing the production company to receive its money sooner, but including a service fee.

Transferable tax credits belong to the nonrefundable tax credit category. Transferable tax credits may be sold or assigned to a local taxpayer. The production company can handle this transfer directly or indirectly through a broker. Brokers typically add on their commission. The regulation process of transfers varies by jurisdiction.

Production companies should use a Nonrefundable or refundable tax credits to offset a current tax liability. The surplus may be carried forward to reduce taxes in the following years. The policies and procedures associated with the length of time that the tax credits may be carried forward is determined by individual jurisdictions.

What Is Up-Front/Back-End Funding?

These are funds allocated to qualifying companies. The money comes from local taxpayers who receive beneficial tax treatment from their jurisdiction.

International Production Incentives

This section outlines the incentives used to entice U.S. and other foreign production companies. Incentives from the rest of the world designed for local content productions are not discussed.  Certain incentives will require a copyright be filed locally or that the local distribution rights be held locally. The following incentives are free of these requirements:

Eligible Production Companies

What is an Eligible Production Company?

Jurisdictions independently determine which companies are eligible for incentives e.g., Business X is exclusively engaged in film production.

What is and Eligible Project?

Jurisdictions, independent of each other, list the types of projects eligible for incentive benefits. The types of projects eligible can vary widely between jurisdictions. Certain categories of TV programming are often excluded e.g., “adult programming”, news, and weather.

Qualifying Project

Jurisdictions establish a minimum spend test so that the project serves a wider purpose for revenue base, local industry, or employment. These may be the minimum number of local shooting days/stage days, resident employee requirements, or some other test.

Qualifying Expenditures

Typically, jurisdictions list the goods and services that constitute qualifying expenditures that may count toward incentive benefits—the benefit-calculation base. At times, both preproduction and post-production are included. Again, expenditures are defined by each jurisdiction independent of the others.

Benefit Limits

Many jurisdictions enact annual caps on the maximum awarded amounts under incentive programs. Some jurisdictions cap the amount that can be award to any project. For TV, there might be an episode cap or a series cap. Various jurisdictions also mandate qualifying expenditure caps on salaries. Usually salaries of one million dollars or more paid to individuals are excluded from these caps.

Key Issues to Consider


Some jurisdictions have annual funding caps limiting the allocation of funds. Make certain all rules are fully understood.

Employment Issues

How do jurisdiction taxes affect the cast and crew? What must be done to satisfy all jurisdiction guidelines? If tax withholdings are taken out of all payments to my corporation will this qualify the production for incentive benefits? Will my corporation be taxed as an entity?

Residency Requirements

Are qualified residents required to pass a test? How is it verified? Can local companies be used to qualify goods and services that are unavailable or that originate outside of the jurisdiction in question?  What is the test applied e.g., dates of services, date of payment, et cetera.

Confidential Financial Information

How do producers acquire and secure confidential financial information from disclosure?

End Credits

Are there requirements imposed by the jurisdiction regarding acknowledgement of support in order to receive benefits?

Local Advice

When new to an area contact the local film office to facilitate production. They can be an invaluable resource assisting with locations, crews, and vendors for goods and services.

Sunset Dates

Access to the funds tied to incentive statues ends on what is known as the sunset date.