Small European Film Markets: Portraits and Comparisons

Funding

This section compares levels of public funding across the seven CresCine ecosystems and accounts for their differences in how public funding is organized (see Methodology: Funding).

Direct public funding plays a crucial role in all markets, though the size of the funding available to film production and development varies significantly. The following considers direct funding for production and development for film and television production channelled through screen agencies. Funding for television through public broadcasters is not included.

Denmark had by far the most generous public funding schemes, between €32 million (2014) and €45 million (2020) was allocated to production and development of film and television. Flanders had the second-highest amount of direct public funding, between €15.5 million (2015) and €29.2 million (2019). A notable difference between the funding in Denmark and Flanders is that on average 35% of the funds in Flanders were allocated to TV and series production compared to 19% in Denmark.

Portugal and Ireland both averaged about €10 million in direct funding for production and development. In Portugal, this support was at its highest in 2016 with €13.7 million, before falling to €8.3 million in 2017 and then rising again. The Irish support fluctuated even more with a peak of €25.1 million in 2022, lows of 2014 and 2017 saw €4.4 million and €4.8 million respectively, while support reached €15.6 million in 2018. The fluctuation in production and development support was not a result of fluctuations in overall support awarded by Screen Ireland which increased from €17 million in 2014 to €37.5 million in 2022. Adjusted for purchasing power, the support for production and development in Portugal was significantly higher than in Ireland. Whereas the Portuguese support levels now come close to Flanders, Ireland’s support levels are now comparable to Croatia.

Lithuania and Estonia had the lowest levels of direct public support for production and development, while Croatian levels were somewhat higher. After a sharp drop from €7.3 million in 2014 to €2.1 million in 2015, Lithuanian funding rose steadily to €5.5 million in 2022. Estonian funding rose sharply from around €3 million in 2014 and 2015 to €5.5 million in 2016. This increase in funding was allocated to films celebrating the centenary of Estonian independence in 2018. After 2017, support stabilized at about €4.5 million, except 2021 which saw €5 million awarded as crisis support after Covid-19 for a total of €12 million in support. The Estonian Cultural Endowment also offered about €2 million yearly to various film industry projects, including production and development funds.

Except for Croatia, all CresCine markets saw increased overall public funding in 2020 or 2021 as a response to the Covid-19 pandemic. Notwithstanding this decline, Croatian HAVC's additional Covid-19 funding amounted to €1.3 from 2020 to 2022 in total, while the total development and production support fell from €9.4 million in 2019 to €7.8 million in 2020 and €6.7 million in 2021. 2019 was also the year with the highest amount of support for development and production in Croatia, as support had increased steadily since falling from €8 million in 2015 to €5 million in 2016.

Despite the importance of direct public funding in all CresCine markets, films are also produced without any direct public support. In Estonia and Lithuania these are a significant share of the domestic successes, and several of the highest earning Flanders-produced films did not receive VAF support. In both Lithuania and Flanders, the national incentive schemes are open to local productions.

All CresCine markets except Denmark have investment schemes on a national level. Ireland has by far the most extensive scheme with an average qualified local expenditure of €265 million in the period, although with significant variation year on year, ranging from €136 million in 2018 to €500 million in 2021. The Portuguese cash rebate scheme has rapidly grown from €24 million when it was introduced in 2018 to €99.3 million in 2022, making it the second-largest scheme among the CresCine markets that year. The Lithuanian scheme has also grown rapidly throughout the period, from €1.2 million in 2014 to €60 million in 2022. Similar to the Irish scheme, the investments attracted by the Croatian scheme varied significantly from year to year. In 2019, the scheme reached a record of €45 million, while 2020 saw investments fall to €11 million before rising back to €45 million in 2022. The Estonian scheme reached its highest investments in 2019 with €20 million, most of this in Tenet (US, UK 2020) alone, which was achieved by pooling funds for the cash rebate for several years.

The Belgian tax shelter is by far the most stable incentive scheme. The share of investments in the Flanders region varied from €67 million in 2017 to €54 million in 2021. In addition to the Belgian tax scheme, Flanders has a regional economic fund in Screen Flanders. This scheme offered between €5 million (2014) and €3.5 million (2020), attracting local expenditure between €24 million (2014) and €37 million (2022). While not a national scheme, it is included here as Flanders is the market under examination. Estonia also has a regional scheme in Tartu, offering €150,000 yearly in cash rebates. Copenhagen Film Fund operated in the Danish capital area from 2013 to 2018 and invested about €10 million in the period.

The schemes are also in varying degrees created to support local film production or to attract incoming productions. The Estonian cash rebate scheme is exclusively targeted to incoming productions, while the Belgian tax shelter scheme, despite being open for foreign investors, requires a Belgian producer or co-producer. Likewise, the Lithuanian scheme requires a local producer to submit the application but does not require the local producer to have co-producer status.

This section considers how the CresCine markets balance the cost of direct public funding against the direct or indirect costs of incentive schemes, and the funding raised from direct funding compared to investments and the share of funding raised for local productions versus incoming productions.

In all these aspects, Denmark is the only industry where all public support is direct and as such all funding is directed towards local productions. This does not exclude private investments from being part of the Danish film industry – on the contrary, the market scheme specifically demands that the producer raise 60% of their total budget from other sources, and very few films are fully funded by public support. This also applies to all CresCine markets, thus comparing direct public funding to investments raised through schemes is therefore problematic, as direct public funding also generates additional investments and taxable spending. See further discussion in the methodology.

In other markets, incentive schemes – whether directly as cash rebate payments or indirectly through tax credits – make up a considerable part of the public cost of film industry funding. Ireland is the industry where direct public funding forms the smallest part of the public cost funding the film industries, while both Lithuania and Portugal are also moving towards spending considerably more on cash rebates and tax incentives than production and development support.

Since the incentive schemes in varying degrees are designed to attract incoming investments, they also affect the balance between how much of the funding is connected to local and incoming productions. In all markets where data on the share of local and incoming investments are available, the incoming investments have over time become a larger share of funding than local investments and direct public support combined.

As no data on the cost of the Belgian tax shelter was available, only the cost of Screen Flanders is included in the figure above. Screen Flanders and the Belgian tax shelter are open to both domestic and international investments, though Screen Flanders is more oriented towards incoming investments and the tax shelter more oriented towards local investments. Screen Flanders supports projects with maximum Belgian share of 50% of the financing unless the budget is above €4 million and there is a potential for an international market. Most of the productions taking part in the Belgian tax shelter scheme were either 100% national or majority Belgian productions (Tax shelter annual report 2022).