Tax rebate

Details of the 30% tax rebate available in Hungary

What productions can benefit?

  • Films of all genres made for cinema release
  • Feature films, series, documentaries and animations made for televisions or other distribution platforms
  • Porn and extreme violent films, commercials, reality shows, news, sport coverage, talk- shows, talent shows and daily soap operas and scripted realities are excluded

Cultural test

  • Films applying for the incentive have to be submitted to a cultural test
  • Films must contain European content or cultural values and additional points are granted if EU nationals are either making or financing the movie (point system)
  • 16 out of 32 points has to be earned to pass

Registration of company and production

  • Applicant must be a Hungarian company or a Hungarian branch of an EU company registered by the NMIAH (National Media and Infocommunications Authority of Hungary).
  • Applicant must be the film’s producer, co-producer or production service provider who is responsible for and actively involved in the production of the film throughout.

Who provides the financial support?

  • Corporate-tax-paying domestic companies that may reduce their tax payable and tax base by the financial support they provide (double write-off)
  • The financial support is provided in the form of a cash refund (post-financing)
  • Film producing companies can request the support from the collection account of the Hungarian National Film Fund (it may charge a maximum administration fee equal to 2.5% of the subsidy granted)

Eligible expenses

  • It is based on the eligible Hungarian and the eligible non-Hungarian spend
  • Definition of eligible HU Spend: production expenditure as per the film’s registered budget / spent by the Hungarian Production Company and accounted for in its statutory tax books / paid to Hungarian tax registered subcontractors (both companies and individuals).50 % of the foreign cast members’ remuneration qualifies as eligible HU Spend if the remuneration is taxable in Hungary and if the 15 % personal income tax is paid effectively to the Hungarian tax authority. Definition of eligible non-HU Spend: same as above with the exception that it can be paid to any foreign (non-Hungarian) entity for costs material to the completion of the production. The 50 % cap for the remuneration of the foreign crew and cast members applies even if the payment is made to a corporate entity. The eligible non-HU Spend is capped at 25% of the eligible HU Spend.
  • Third country location shooting is possible. Any cost incurred abroad counts providing that it fulfils the requirements for definition of eligible HU and non-HU Spend

How much is the incentive?

  • All local Hungarian expense (with few exceptions) will qualify for a 30% rebate.
  • An additional allowance of 25% of the local Hungarian spend can be spent on foreign costs by the Hungarian Production company. This will qualify for a 30% rebate as well.
  • 1,000,000 local spend + 250,000 foreign spend = 1,250,000 qualifying spend = rebate of 30% or 375,000
  • Local and foreign spend can be in any currency and can also be spent outside Hungary.
  • No minimum spend, no cap per project, no annual fiscal budget cap.

Excluded or limited costs

  • Part of copyright costs over 4% of the budget
  • Travel costs are limited to trips from and to Hungary, stopover possible
  • P&A is limited up to 2% of the budget (but max 10m HUF)
  • Cost of services delivered by non-Hungarian sub-contractors limited up to 25% of eligible Hungarian spend.
  • Producersʼ fee (line, co-, executive and other producers) maximum up to 4%
  • Costs of completion bonds limited up to 5% of the budget (but max 100m HUF)
  • Remunerations of cast and crew members up to HUF 3 million per person and per film production will be eligible at 100% for tax rebate, and the eligibility of all remunerations exceeding this limit will be capped at 50%. (these limitations do not apply to Hungarian self-employed or loan-out cast and crew members whose remuneration is subject to different tax liability than personal income tax)
  • expenses, where date of the certificate of completion falls out of the production period or it is issued later than 3 months from the end date, are excluded
  • any expenses settled by compensation (products or services) have to be excluded
  • any costs related to a film produced about an event, are limited to the expenses incurred regarding the production, and not the event. If costs cannot be separated, all expenses should be excluded

Original source https://nfi.hu/en/funding