In the battle to lure high-budget footloose productions to international production hubs, two of the most prized of this year's scalps have gone to Germany. Both Bryan Singer's Valkyrie for United Artists and the Wachowski brothers' Speed Racer for Warner Bros have shot in the territory, seduced in no small part by the fiscal attractions of the new German Federal Film Fund (Dfff). Both were reportedly heading to Prague in the Czech Republic until Germany unveiled its new fund.

Significantly, Patrick Crowley, the US producer of the Bourne trilogy, has said Universal Pictures would have shot more of The Bourne Ultimatum in Germany had the Dfff been in place at the time. Joel Silver, who produced Speed Racer, says that with the incentive, it made economic sense to base the production at Studio Babelsburg. He is now hoping to return to Germany with further projects.

'Within Europe, it is always a mixture of reasons where a film goes,' says Carl Woebcken, CEO and president of Studio Babelsberg. 'One important issue, of course, is the overall cost. The new subsidy from the Dfff helps because the above-the-line costs are also incentivised. On Speed Racer, for example, the $12.2m (EUR9m) rebate is more than the total costs for the stages and the complete set construction.'

Defining the DFFF

Launched in January this year, the Dfff has an annual budget of $81.9m (EUR60m) for the next three years. The fund reimburses 20 cents of every euro spent in Germany up to a maximum of 80% of a qualifying film's total production costs. At present, there is a cap of $5.5m (EUR4m) on the amount that can be awarded to a single project, although this can be increased to $13.6m (EUR10m) if the German spend amounts to at least 35% of a film's total production costs - or if two-thirds of the points of the cultural test are attained.

Three films have exceeded the cap so far: Speed Racer ($12.2m), Valkyrie ($6.5m) and Tom Tykwer's English-language m, at $7.9m for Sony Pictures. The biggest hand-out to a German-language project so far is the $3.7m given to Uli Edel's Der Baader-Meinhof Komplex, produced by Constantin Film.

Some 77 projects have received production support totalling $65.2m (EUR48m) from the Dfff to date. Over a third of this amount has been paid out to international projects including Malgorzata Szumowska's 33 Szenen Aus Dem Leben, Nana Djordjadze's The Rainbowmaker, Ben Hopkins' The Market and Shirin Neshat's Summer 1953.

While some German producers are privately critical of the big studio projects attracting large chunks of Dfff cash, one of the fund's stated aims is to promote Germany's international competitiveness for location and studio shoots. The presence of Speed Racer and Valkyrie in Berlin over the summer has given employment to many in the local film industry and associated service-providers and the experience has ensured there will be knock-on benefits for German productions.

The potential of the Dfff for the wider German economy has already been recognised by finance minister Peer Steinbrueck who suggested on a visit to the Babelsberg studios in August that the fund should be extended beyond the present cut-off period of 2009.

The icing on the cake

The Dfff is administered by the German Federal Film Board (FFA) and was the brainchild of Bernd Neumann, the state minister for culture and the media, after consultation with the German film industry. It is managed by the FFA's Peter Dinges with project manager Christine Berg heading up a team of four.

German producers broadly support the fund. The turnaround of applications is swift, with the fund urging producers to get in touch before applying to iron out any potential problems. Claussen+Woebke+Putz Filmproduktion was the first applicant on January 2 - a day after the Dfff guidelines came into effect - for Stellungswechsel and received notification of $500,000 (EUR368,000) funding by January 17.

'It's the icing on the cake that we can invest in higher production values and better payment for the crew,' says Karsten Aurich of Sabotage Films which began shooting Hannes Stoehr's Berlin Calling this week.

To access the fund, a producer must submit an application not more than three months before the start of principal photography with proof of 75% of the financing, evidence of a binding, unconditional distribution agreement, and the passing of the cultural test. Funds are then triggered automatically. Crucially, it is not a tax-based scheme, as is the case in the UK.

'It gives producers the freedom, and also the responsibility, to determine themselves whether they qualify and how high the claim (for funding) will be,' says Dinges.

The biggest challenge for producers is the distribution agreement, which must specify the release of the film in Germany on at least 30 prints (or 15 prints if the Dfff funding is less than $435,000 (EUR320,000) - 10 for feature debuts, and four for documentaries). Some producers are calling for more flexibility on this point, possibly the submission of international pre-sales contracts as an acceptable alternative.

But as it stands, the Dfff will follow the theatrical release of each project it has supported and demand full repayment if the minimum number of prints is not in the cinemas.

Victims of success

The fund's biggest problem may lie in its own success. The boom in production has created a shortage of local crews, equipment and facilities, while TV producers have been accused of getting in on the act by the back door. What is more, there are fears the broadcasters, normally steadfast backers of the local film industry, may decide to redirect their coffers elsewhere.

The future of the fund rests on the success of the first films to be released by the fund, starting with 20th Century Fox's Stellungswechsel on October 3. The comedy about a male escort service will hopefully deliver a whole lot more than good-looking beefcake.

THE LOWDOWN

The cultural test

To apply for Dfff funds, projects must accumulate a total of 48 out of a possible 94 points from the two categories of points labelled Cultural Content and Creative Talents (from a possible 63 points) and Production (from a possible 31 points).

At least four criteria of the Cultural Content category must be met. They include:

- Film plays mainly in Germany or in the German culture area
- Uses German locations
- Storyline/underlying material is German
- Storyline/underlying material refers to a personality of contemporary or world history or a fictional character in cultural history
- Storyline/underlying material deals with issues of religious or philosophical beliefs or issues of current social or cultural relevance
- Film plays mainly in another European Economic Area (EEA) state.
In addition, points can be gathered in the Creative Talents section for:
- Actors of international standing from Germany in an important role
- Actors of international standing from another/further EEA state in an important role
- Creative talents from Germany or the EEA in responsible positions (director, scriptwriter, producer/co-producer, composer etc)
The Production category attracts points for:
- Location shooting or studio shooting in Germany
- At least 25% of digital effects in Germany
- At least 25% of special effects in Germany
- 100% of music recordings in Germany
- 100% of sound editing and mixing in Germany
- 100% of laboratory work up to first release print in Germany
- 100% of print editing (incl. telecine) in Germany
- 100% of final editing (incl. digi intermediate) in Germany

THE FILMS

Selected films with Dfff support

Stellungswechsel
Dir: Maggie Peren
Prod co: Claussen+Woebke +Putz Filmproduktion. Four thirtysomethings band together to set up a male escort service.
German dist: 20th Century Fox
Release date: October 3

Memory Books
Dir: Christa Graf
Prod co: Kick Film
Mothers dying of Aids in Uganda prepare memory books on their family history for their children.
German dist: Stardust
Release date: November 15

Meine Schoene Bescherung
Dir: Vanessa Jopp
Prod co: X Filme Creative Pool
A Christmas Eve party with a difference.
German dist: X Verleih
Release date: November 22

Die Wilden Kerle 5
Dir: Joachim Masannek
Prod co: SamFilm
The Wild Soccer Bunch's fifth adventure into the world of shadows and vampires.
German dist: Walt Disney
Release date: February 21, 2008

Fleisch Ist Mein Gemuse
Dir: Christian Gorlitz
Prod co: NDF
Tragicomic story of the bashful musician Heinz who gets a chance at the big time.
German dist: Universal
Release date: April 17, 2008

Speed Racer
Dirs: Larry and Andy Wachowski
Prod cos: Warner Bros Pictures, Silver Pictures, Village Roadshow Pictures, Sechste Babelsberg Film. Action film based on the animated 1960s cult series of the same name.
German dist: Warner Bros Germany
Release date: May 8, 2008

Disengagement
Dir: Amos Gitai
Prod co: Pandora Film Produktion
A political drama focusing on one family's struggles during Israel's withdrawal from the Gaza strip in 2005.
German dist: Pandora Film
Release date: TBC

Valkyrie
Dir: Bryan Singer
Prod cos: United Artists, Achte Babelsberg Film.
The true tale of Claus Schenk Von Stauffenberg and his attempt to kill Adolf Hitler.
German dist: 20th Century Fox
Release date: TBC