Led by UK players, Europe’s tax fund managers are diversifying their operations into new territories and new spheres of activity.

Future Film, which has risen over £1bn of tax-backed film finance, yesterday announced that it is launching a fully-fledged German tax fund. The move follows the UK government’s February 10 clampdown on equity funds and the impending demise of the Section 48 tax scheme.

For a similar reason, Anglo-Canadian player Grosvenor Park yesterday announced that it will take a significant step towards becoming a producer in its own right.

The Belgian government was also in Cannes yesterday, pitching the user friendly nature of its newly approved tax shelter.

Future’s German operation starts with the expectation of raising €50m in its first year, which it says translates into some €90m of production funding.

The fund comes complete with retail sales operation provided by Veritas and a production partnership in place with Studio Hamburg International Productions (SHIP).

It is a mutually beneficial Anglo-German strategic alliance that benefits Germany and all of European production,” said Future chief Stephen Margolis.

SHIP co-chief Stuart Pollock said that it is in the “concept-driven genre business” and will target international productions with budgets of less than €30m. “Initially we will not be making German-language pictures.” Typically, it will seek pictures produced by those US independents with studio output deals in place.

Already competing in the same smaller-than-studio-budget area are funds like VIP Medien, Apollo Media and Equity Pictures.

VIP, the big daddy of these “producer funds” and which last year raised €250m of capital, is poised to unveil a pan-European distribution operation. Equity, which last year raised €67m, yesterday sought to differentiate itself from its rivals by highlighting the success of its cherry-picking strategy in terms of international sales.

Gerd Koechlin, Equity’s head of production said that even before selling the 13 major territories, one of two Stratos-produced pictures the $15.5m Matador had scored $5.5m of sales through Arclight. Its Crazy In Love (aka Mozart And The Whale)has already more than covered its $6.5m budget from sales through producer-seller Nu Image. Handled by Syndicate Pictures, its $55m Bruce Willis vehicle Hostage has almost sold out with only the UK and Hong Kong remaining.

“When you have big stars and the right concept pre-sales are perfectly possible,” said Equity CEO Andreas Thiesmeyer.