Lina Klesper is an International Legal Assistant at PKF Malta
What brings famous actors Brad Pitt, Angelina Jolie, Tom Hanks, and top directors Steven Spielberg and Michael Bay to Malta? The answer would be high-quality movie productions valuing the Maltese Islands as an attractive film set and production location. Many well-known titles, such as the Gladiator movies, Troy, and crucial scenes for Game of Thrones, were filmed on the Maltese Islands. One of Malta’s most iconic film productions was probably Popeye, an American musical comedy with Robin Williams, released in 1980. Popeye´s film set still stands today as a tourist attraction and theme park, better known as Popeye Village.
Malta has a notable track record of attracting top productions from Warner Bros. Ent., Dreamworks LLC, Universal Studios and Paramount Pictures. Reasons for this are Malta´s diverse Mediterranean setting, long hours of natural sunlight and the possibility for water-based filming. Additionally, Malta provides advantages through well-connected flights, know-how in craftmanship for film set construction and a pro-business attitude. Another considerable factor in choosing Malta as a filming location is the local financial incentive framework with cash rebates and fiscal incentives. Currently, Malta is paying considerable subsidies to attract top productions. According to the official Malta Film Commission guidelines on financial incentives for the audiovisual industry, the Maltese Government guarantees a maximum cash rebate of 40% for eligible costs incurred in Malta to domestic and international companies for qualifying productions with a cap of 80% of the overall production budget. Besides other requirements, the qualifying company must pass a cultural test, and the expenditure for audiovisual productions must be €100,000 in Malta at a minimum, with an overall budget exceeding €200,000.
Considering recent debates about the Mediterrane Film Festival of 2023, which cost taxpayers €3.8 million, and discussions about the potential of Malta´s film industry at large, the question arises if Malta´s cash incentives are justified or perhaps too competitive compared to other locations in the Mediterranean offering similar advantages for film production.
Audiovisual productions in Greece, passing a simplified cultural test, can qualify for a cash rebate of 40% for all production and post-production expenses made locally with a minimum local expenditure for feature films of €100.000. While there is no cap on the budget, the maximum cash rebate cannot exceed €12 million. In case the Greek minimum expenditure is €6.4 million, even fees of the international director and two leading actors – summing up to 25% of qualified local expenditure – may also receive the 40% cash rebate, which can make the Greek scheme quite competitive.
Cyprus offers a cash or tax rebate of up to 40% of the production and post-production costs and 25% of the pre-production expenditures made locally. This Cypriot scheme requires a higher minimum qualified expenditure than Malta, amounting to €200.000 in the case of feature films, with a cap of only 50% of the total production budget.
Under Italian film and audiovisual regulations, international productions can obtain up to 40% tax credit of the eligible costs of the total budget through an Italian executive producer for a maximum of €20 million per year. The annual tax credit on production expenditure is capped at 75% of the total production cost. Alone in 2022, 800-900 productions benefitted from Italy´s film incentives scheme. However, it has been criticised that incentivised productions only reached a minority of viewers and are underperforming at the box office, which has raised official discussions of budget cuts and reforms in Italy. This highlights a very important issue for countries offering film incentive schemes. Since filming facilities aim to attract high-quality productions, respective local schemes should include requirements safeguarding quality, such as a track record of production companies testifying to their reputation and recognition of projects, for example, at film festivals.
Croatia seems to offer a less competitive rebate of only 25% to international and local filmmakers on qualifying Croatian spending for film and TV productions shooting in Croatia. An additional 5% can be approved for productions filming in regions with below-average development. The Croatian scheme also requires the highest minimum spend of around €260.000 for feature films compared to the other locations in the Mediterranean. Besides an elaborate cultural test, it is required that in case a production benefits from more than €500.000, at least one Croatian trainee must be employed in each of the main production departments. All Mediterranean programs, for that matter, include specific requirements to various extents to incorporate local expertise and workforce and foster national talent substantially.
To conclude, compared to the various schemes in the Mediterranean, Malta has certainly positioned itself as a competitive film destination similar to those of Greece, Cyprus, and Italy. Nevertheless, it is crucial that the Maltese scheme provides adequate safeguards to attract top productions that contribute to the country’s overall economic well-being, create job opportunities in the film sector, and promote Malta as a cultural, economic, and tourist hub.