The European Commission (EC) has finally adopted a new Communication on state aid for films and other audiovisual works.

The new Communication, which comes into effect as soon as it appears in the EU’s Official Journal covers, as today’s text says, “in particular, (…) State aid for a wider scope of activities, highlights the principle of subsidiarity in the area of cultural policy and the respect of internal market principles, introduces a higher maximum aid intensity level for cross-border productions and caters for the protection of and access to film heritage.”

“The Commission believes that these changes are necessary in view of the developments since 2001 and will help European works to be more competitive and pan-European in future.”

In something akin to understatement, the Commission said that the issue of territorial obligations had attracted “particular attention” and noted in its new text that “Paragraph 50 (of the Communication) sets the limits for each mechanism within which the Commission can accept that a Member State is applying territorial spending obligations which could be still considered as necessary and proportionate to a cultural objective.”

“In the case of aid awarded as grants, the maximum territorial spending obligation should be limited to 160% of the aid amount. This corresponds to the previous ‘80% of the production budget’ rule when the aid intensity reaches the general maximum stated in paragraph 52(2), namely 50% of the production budget.”

The Communication also states that: “In the case of aid awarded as a percentage of the expenditure on production activity in the granting Member State, there is an incentive to spend more in the Member State to receive more aid. Limiting the eligible production activity to that which takes place in the Member State granting the aid is a territorial restriction. Consequently, to establish a limit which is comparable to the limit for grants, the maximum expenditure subject to territorial spending obligations is 80% of the production budget.”

The so-called Cinema Communication is the result of a review process which began in 2011 and involved three public consultations of the European Union’s member states and stakeholders.

The EC had first published rules on the application of state aid guidelines to aid for film production in 2001. These rules had expired at the end of 2012 and are now amended by the new Communication.

The initial text as proposed by Competition Commissioner Joaquín Almunia, EC Vice President, had attracted substantial criticism from public funders and professionals alike throughout Europe in recent weeks particularly on the issue of ¨territorialisation¨.

However, there was relief and satisfaction that the Commission had listened to the arguments put forward by such groups as the EFADs network of European national funding agencies, as noted by Peter Dinges, chief excutive of the German Federal Film Board (FFA) on seeing the Communication’s text on Thursday morning.

Only days before the new Communication was adopted, MEPs had still been tabling questions to the Commission to explain its legal basis for its proposed new measures.

Creative Europe endorsed by EP Committee on Culture & Education

The adoption of the Communication comes just over a week after the EP’s Committee on Culture & Education endorsed the Creative Europe framework programme after negotiations with the Commission and the European Council.

21 of the Committee’s members voted for the final text, none against, and one MEP abstaining, before the programme passes to a full session of the EP’s plenum next Tuesday (Nov 19) for a final vote by all MEPs.

UK response

The news was welcomed by UK officials.

Chancellor of the Exchequer, George Osborne, said: “The UK film industry makes a valuable cultural contribution and is an important part of our diverse and dynamic economy. Through the film tax relief we have been able to support this highly skilled, innovative and creative sector and the European Commission’s Cinema Communication will mean we can continue to provide that support.”

Ed Vaizey, Minister for Culture, Communications and Creative Industries said “It is fantastic that we now have a new Cinema Communication in place, confirming the on going viability of our extremely successful film tax regime that attracts moviemakers from all over the world.”

Amanda Nevill, CEO, BFI said “The BFI is delighted that the Commission has listened to our representations, made in partnership with other European countries, on behalf of the industry. This successful outcome is a great example of what can be achieved when the main agencies for film in the UK and across Europe come together and pool expertise.’’

Three films nominated for 2013 LUX Prize

Committee chair Doris Pack also announced that MEPs would be invited to view the three contenders for this year’s LUX Prize:

The Broken Circle Breakdown by Felix van Groeningen (Belgium),

The Selfish Giant by Clio Barnard (UK), and

Miele by Valeria Golino (Italy, France).

The parliamentarians had a chance to see the films - subtitled in the 24 official languages of the EU - during the LUX Film Days at Brussels’ Bozar cinema until November 13, and there will be two screenings a day at the European Parliament from November 25 to 6 December. Voting takes place between November 4 and December 10, with the winner announced by EP President Martin Schulz at a formal ceremony in Strasbourg on December 11 attended by representatives of the three films.

For the second year running, the general public can also vote for their favourite film of the three on the LUX Prize website or Facebook page. The film with the most ¨people’s votes¨ will be awarded the Public Mention which will be announced at next year’s Karlovy Vary International Film Festival where the 2014 edition of the LUX Prize is launched.

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