Look, it's not Speed Racer. It's not Iron Man. But this is a quality film, it's really fun and it's an amazing cast," says Jens Meurer of Egoli Tossell, the German producer of Michael Hoffman's English-language The Last Station, now shooting in Cologne.

Set in 1910, the film tells the story of the last days in the life of Russian War And Peace author Leo Tolstoy. It stars Helen Mirren (who is of Russian descent and was born Ilyena Mironov) as Tolstoy's wife Sofya, James McAvoy, who plays Tolstoy's secretary, with Christopher Plummer as Tolstoy and Paul Giamatti as Tolstoy's dedicated and slightly priggish disciple, Chertkov.

It is the first film made through Def, the joint, German-based production venture between Meurer and UK producer Chris Curling of Zephyr Films. The two met through ACE, the European producers' network, and have since worked together on the South African film Spoon in 2005 and the German title Almost Heaven the same year. Meurer has tackled ambitious Russian costume dramas before. He produced Alexander Sokurov's Russian Ark, the famous "one take" epic shot in the Hermitage.

They chose to shoot in Germany, says Curling, due to the excellence of German technicians, the generosity of the country's regional funds and its centrality. "It's the centre of Europe - close to Prague, Warsaw and on the way to St Petersburg and Moscow," he says. Def, which is based in the central German city of Halle in the Saxony Anhalt region, where most of the film is being shot, has raised a substantial amount of the film's approximate $39m (£20m) budget out of Germany. In addition to $2.5m (EUR1.6m) from the Federal Film Fund, and a bank loan from Commerzbank in Berlin, it has secured $3.4m (EUR2.2m) from three German equity funds: MDM covering the states of Saxony Anhalt, Thuringen and Saxony, the MBB in Berlin-Brandenberg and the Federal Film Fund, which provides project funding by committee.

Sales agent The Little Film Company has also pre-sold rights to Warner Bros for Germany, Austria and Switzerland.

The set-up reflects the changing nature of the European co-production scene.

"In the days of (the now defunct UK tax break) Section 48, we might have shot in Russia, Germany or Prague," Curling explains. "We would have qualified it as British and done all the post in the UK and maybe the studio (work) in the UK.

"Our main cast is British and all our heads of department are British. We'd have qualified in that way and partly financed it in that way. But with the new UK tax credit, it doesn't work for us at all because the film is not set in the UK and therefore it is not possible to do most of the shooting in the UK. We had to find a different way of financing it. We've financed it with Jens on the lead on the financing. It's a simple German film made by a German and a British producer."

Russian rights have been sold to producer-distributor Andrei Konchalovsky's Production Center which plans to "team up" with a Russian distributor to release The Last Station. The project may also become an official German-Russian co-production.

The Last Station has had an unusual gestation. In the late 1990s, legendary Holly-wood star Anthony Quinn optioned Jay Parini's novel on which The Last Station is based with a view to playing Tolstoy himself. During the 1990 shoot of Tony Scott's Revenge, Quinn befriended US producer Bonnie Arnold. But the project was never set up, and Arnold moved sideways into animation, producing Over The Hedge and Toy Story. In 1999, two years before Quinn's death, Arnold took over the rights. Four years ago, US director Michael Hoffman, whose diverse credits include Restoration, One Fine Day and Game 6, approached Arnold about the project, having read Parini's novel during a train journey.

Hoffman says he has been shooting the film in a freewheeling way that emphasises the story's contemporary resonance. "I've always felt biographical features are not worth making unless you make them as if they are fictional." He reflects on his decision to use handheld camera, steadicam and elaborate dolly shots: "It's an irreverent kind of period movie... there's a constant movement between the tragic and the melodramatic, the absurd and the ridiculous."

The Last Station is set for completion early next year. The Little Film Company is screening some footage at Cannes.