Germany's status as a major source of funding for international co-productions could be a thing of the past thanks to new government legislation which threatens to curtail the country's involvement in such projects.

A new Finance Ministry legislation could effectively halt the huge flow of money out of Germany into predominantly US productions by the private German film funds.

Under the new rules, producers will now only be able to claim tax relief on the part of a film's budget that is spent by a German company. Moreover, German producers will also be unable to offset the foreign losses against positive German income, meaning that they may end up paying tax on the exploitation of the film as profit even before the full production costs have been amortised.

The move could have a serious impact on both German films and international projects that rely upon Germany as a co-production partner. In 1999, 30 of the 71 German films released in local cinemas were made with foreign partners, although the actual number of German-foreign collaborations going before the camera is much higher than this number would suggest. Indeed, some of the most high profile international co-productions of recent times - such as Dancer in the Dark, Enemy at the Gates and Bread and Roses - have involved German partners.

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