Following a public consultation, the European Commission has officially prolonged current state aid assessment criteria for cinema in Europe until 31 December 2012

The Commission uses the criteria to approve Europe 's national, regional and local film support schemes under the EU's state aid rules.

Extending the current rules provides much-needed certainty for the industry, particularly in the current economic climate.

The Communication which officially prolongs the criteria also identifies trends that the Commission is likely to look at in a future Communication on Cinema.

As reported previously in ScreenDaily the Commission was reluctant to amend the current rules before considering new trends in the sector, particularly in distribution and digital technology. It was also keen to review the economic and cultural impact of territorial conditions in film support schemes.

In addition, the Commission will now look at industry trends in areas outside of production such as film distribution and digital projection; an increase in regional support schemes; and competition among Member States to use state aid to attract inward investment from large-scale, mainly US, film production companies.

Given the complexity of the issues highlighted, the Commission is expected to enter into consultation with Member States, film support bodies and the European film industry.

Confirmation of the prolongation came in a joint statement from European Commissioners Neelie Kroes and Viviane Reding.

EU Media Commissioner Viviane Reding underlined the need for stability in the industry but also stressed that the industry must proactively address the challenges of a changing market:

'For European creators to express themselves, they need a stable environment for the film industry. This is why we are reconfirming today the Commission's current approach to national aid to cinema for another three years.

'The European audiovisual industry is facing new challenges in rapidly evolving markets. This is why we must also launch a debate to find ways of turning these challenges into opportunities, in particular in better using the Internal Market dimension and in looking beyond Europe's borders.' Commissioner Reding said.

An estimated Eu1.6bn is spent on national film support each year across Europe, mainly in the form of direct grants or tax incentives. Around 70% of the support is focused on film production. Under current rules, state support for film production is exempt from the EU ban on state aid under certain conditions, including:

  • The film fits the definition of cultural according to national criteria;
  • Producers are free to spend at least 20% of the film budget in other EU Member States with no reduction in support provided;
  • Support is limited to 50% of the production budget, except for difficult and low budget films; and
  • Support doesn't supplement specific activities (e.g. post-production)