Germany's film tax landscape could change with a new initiative by the federalstates (Laender) who are championing a tax rebatemodel similar to the UK's new film tax credit.

This comes just two weeksahead of the July 1 deadline when State Minister for Culture Bernd Neumann wasdue to announce his own proposals for incentives toreplace the abolished old-style media funds.

Speaking at the Medienboard Berlin-Brandenburg's annual press conference onWednesday, Erhard Thomas of Brandenburg's State Chancellery revealed that Berlin and Brandenburg were canvassing the other state chancelleries togive their support to a tax rebate model over investment funds and recommendthis to the Laender prime ministers at their meetingin Berlin on Thursday.

'A fund model would nothave a chance either on a federal or regional level,' Thomas said.'There was too much malpractice in the past with the film funds. Given theexistence of competing incentive schemes in Europe, there is the danger that Germany will fall behind with its presentpossibilities.'

Andre Schmitz, head of Berlin's Senate Chancellery, explained that, crucially, arecently convened regional working group had received backing from the federalstates' finance ministries for proposing a tax rebate model. In addition, was told by a high ranking official in the Berlin Senate thatMinister Neumann is also coming around to the idea of a rebate model as opposedto the investment funds or a resurrection of a $113.8m (Euros 90m) risk capitalfund.

Schmitz said that he was'very optimistic' that the Laender primeministers would give their backing to the chancelleries' initiative. He alsosuggested that such broad political support - both from the Laenderand the State Minister for Culture - would then make it harder for FederalFinance Minister Peer Steinbrueck to block such ascheme.

Such a rebate model has beenfavoured by the industry interest group of studios and service companies, AG Deutscher Studiobetreiber und Dienstleister, whose members include Bavaria Film, Studio Babelsberg, MMC Studios,Studio Berlin/Hamburg and Berliner Union Film, as this incentive would make Germany attractive again as a shooting location forlarge-scale projects relative to the competition elsewhere in Europe.