State aid: Commission authorises €231 million Hungarian film support scheme
European Commission - IP/08/1152 16/07/2008
Brussels, 16th July 2008
The European Commission has approved, under EC Treaty state aid rules, a €231 million Hungarian film support scheme, which will run until 31 December 2013. The six-year scheme covers all Hungary's film support measures, including the Hungarian film tax incentive. It is designed to promote the development of film culture in Hungary. The Commission found that the scheme is compatible with the cultural derogation of the EC Treaty, in line with the 2001 Cinema Communication rules concerning aid to film production. The Hungarian authorities will implement any changes that may be required after the expiry of the Cinema Communication.
“European cultural films play an important role in our society. I am pleased that the Hungarian authorities have introduced cultural criteria in their film support scheme since the Commission's interim approval of the original scheme," Competition Commissioner Neelie Kroes commented.
The main objective of the Hungarian scheme is to support and promote the development of Hungarian film culture. Apart from the tax incentive, the Hungarian film support scheme includes direct grants for film development/preparation, production, distribution, as well as the operation of art cinemas and film festivals.
The Commission's assessment of the Hungarian film tax incentive and of the direct grants for film production was based on the EU state aid rules in the 2001 Cinema Communication (IP/01/1326). For the other types of support, the Commission assessment referred to the rules in the Cinema Communication in applying the cultural derogation in Article 87.3(d) of the EC Treaty.
The Hungarian authorities have made a number of changes to the scheme, which was originally approved under the interim mechanism when Hungary joined the EU, to bring it into line with the EU state aid rules. One of the main changes is the introduction of verifiable national cultural criteria, as required by the Cinema Communication.
The Commission's focus on cultural criteria when assessing film support schemes ensures that whatever state aid is available for films is directed towards European cultural films. It also allows the Commission to limit the scope for EU Member States to engage in a subsidy war by using film incentives to attract large, commercial film productions, rather than allowing their national film industries to compete internationally on their merits. Such a subsidy war would be highly detrimental to the entire European film sector.
The non-confidential version of the decision will be made available under the case number N 202/2008 in the State Aid Register on the DG Competition website once any confidentiality issues have been resolved. New publications of state aid decisions on the internet and in the Official Journal are listed in the State Aid Weekly e-News.
The annual budget of the scheme increases broadly in line with Hungarian inflation forecasts over the 6-year period of the scheme. The estimated budgets for the different measures within the scheme in 2008 are as follows: