The Hungarian film industry breathed a collective sigh of relief as Péter Magyar’s government, elected in May, confirmed it is removing the cap on new registrations for the tax incentive.
This cap was introduced last year by the outgoing Hungarian administration and is acknowledged to have had a very damaging effect on the production sector.
Uncertainty around the incentive, worth 30%, rising to 37.5% if non-Hungarian costs are included, led to some major projects shooting elsewhere.
This week, however, Ervin Nagy, state secretary for culture, has confirmed the “blockage on the tax incentive system” has been lifted.
“We stand by the Hungarian film community in every situation. They deserve it. It is our fundamental duty to ensure state support for their work and to help them compete internationally,” Nagy said.
“The amount allocated to the tax incentive yearly pays for itself through its multiplier effect, as numerous studies have already shown. Hungary’s highly skilled craftspeople and outstanding creative talents are increasingly taking on key creative and technical roles in international productions.”
For a period last summer, the National Film Office, the authority that administers the tax rebate, did not accept any new registrations as the financial threshold had already been passed. Even when registrations resumed, there were delays. Hungarian producers spoke of “sitting in a very long queue” waiting for their applications to be processed.
“Unfortunately, we had a real slowdown because there was this cap put on by the previous government. That came out of the blue. We couldn’t even prepare our partners,” said producer Ildiko Kemeny, managing partner of Pioneer Pictures and Pioneer Stillking. “We haven’t been out of work but studios have been semi-empty. The local crews have been worried. We lost some really nice productions to other territories,” Kemeny acknowledged.
“We have been trying to keep the momentum going and explaining that it would be fine, but, to be honest, without this government announcement, it was becoming impossible. So this is very good news for our industry to gain the trust of our international partners back.’
The pause has impacted local producers as well as incoming international production.
“With my company, Laokoon Filmgroup, we have been doing services, minority co-productions, and our productions,” said Gabor Sipos, whose credits include Laszlo Nemes’ Oscar- winning Son Of Saul. “All these were stopped when they capped the incentives. Fortunately, we have been doing international commercials, so we survived.”
He is now in the early stages of a new project with Nemes while his fellow producer at Laokoon, Judit Stalter, is expected soon to start the Swiss-Hungarian coproduction, Glasshouse, on the life of Carl Lutz, the Swiss diplomat in Budapest who saved over 62,000 Jews during the Second World War
“We are pleased the situation has stabilised, and we are committed to ensuring that this remains sustainable. Our immediate priority is to secure confidence. Efforts to attract foreign productions to Hungary must begin immediately,” he said.
Hungary was the first country in Central Europe to introduce a film incentive scheme in 2004. The country’s tax rebate system is guaranteed by the state through the collection account operated by the NFI. Until the cap was introduced, the rebate had been underpinning a period of rapid growth in the sector as well as a massive increase in the crew base and heavy investment in production and post-production facilities.
Even with the cap, some projects continued to access the incentive and shoot in Hungary. Amazon MGM Studios’ Alone at Dawn and Arnold Schwarzenegger action thriller The Kellys; the second season of NBCUniversal’s The Day Of The Jackal; Tristar Pictures’ period drama The Nightingale, starring Dakota Fanning and Elle Fanning; and Hyde Park Entertainment’s Dinner With Audrey, starring Thomasin McKenzie, Judy Greer, Michael Shannon and Ansel Elgort, are among the high-profile international films and TV dramas that have been based recently in Hungary.
In addition, €3.2m has been awarded to Amusement Park Film for Amazon Prime’s eight-part espionage thriller Legacy Of Spies, and €2.5m to W&B Television for Disney+’s Monster miniseries, based on Nele Neuhaus’ eponymous crime novel.
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