Czech Republic, Location for Ana de Armas’ ‘Ballerina,’ Proposes Reforms to Production Incentives Including 2% Tax on Media (EXCLUSIVE)

Major international productions have been bypassing the Czech Republic for the past year but local producers and lawmakers have a plan to win such players back, they announced at the Karlovy Vary Film Festival this week.

The Czech incentives system essentially shut down in 2022 after major productions used up the $62.7 million annual cash-back rebate funds available or so said the officials overseeing the program.

The Czech Republic has offered competitive 20% rebates with a $6.8 million cap per project as incentives for major productions for a decade now. The system has been heralded as the key to staying competitive in a part of Europe thats highly in demand for big-budget shoots by the likes of Amazon, Netflix and the Hollywood majors.

But last years crisis need not happen in the future, says Vratislav Slajer, chairman of the Czech Audiovisual Producers Association (APA). Up to now, he points out, some productions have been able to lock up funds just by estimating how much they plan to spend and what their rebate should be based on that estimate.

This practice had the effect of blocking an otherwise healthy system, he says.

Under a new plan agreed to by the Czech government, local producers and international streamers, productions would now need to actually spend their budgets before they get their rebates, and the system would be greatly simplified.

In addition, media organizations including cinemas, broadcasters, satellite content providers and streamers will all contribute 2% of sales in the Czech Republic into the Czech Film Fund under the plan. That will subsidize film productions and the system will also begin to support TV productions and video game creation, bringing it into the modern age, says Slajer.

We still have a long way to go, he says, but the first step has been achieved.

Czech industry figures are praising the new deal as a possible answer to an incentives system theyve called overcomplicated. Prague-based producer Pavel Strnad of Negativ says hes cautiously optimistic about the plan, which is expected to be approved by the Czech parliament in the fall.

Strnad points out that the 2% levy on international streamers sales in the Czech Republic sounds great on paper but is based on an amount thats kept secret, raising possible transparency issues. Slajer concedes this is a concern to some, but explains that the APA has rough estimates of what streamers earn in the Czech market, adding: Based on predictions, the number is growing. And, he notes, Its not peanuts.

The Czech government will provide matching funds based on the players 2% contribution, Slajer says, which is significant. Ideally, the new system will take effect in 2025, says Slajer. In the meantime, system administrators have agreed to streamline things where they can to help tempt back major productions.

If the incentives amendment proposal passes, Slajer says, and things pick up as hoped, Czech producers will gain as much as foreign ones, having more advantages in getting connected to the global market.

Meanwhile, the big picture is somewhat rosy, say Czech industry figures the production sector is growing, having spent some $687 million in 2022, 70% of that from international shoots, according to the APA. That figure surpasses 2021s high point, and ambitious fantasy, thriller and period series and films have continued to utilize Czech crews, studios and locations from John Wick pic Ballerina with Keanu Reeves and Ana de Armas to Apple TVs Foundation sci-fi series and the Disney+ Anne Frank story A Small Light.

The industry is growing, Slajer says, and not just for Western companies filming in the Czech Republic. Local productions have a growing market share, he notes. And even though Netflix and Amazon compete for eyeballs with Czech media companies, both sides can sit down together and agree on how to improve things for all.

Without changes to the system, however, the Czech Republic production sector is headed into a crisis, Slajer warns.