- 1Spain: An attractive country for investment
- 2Setting up a business in Spain
- 3 Tax System
- 4 Investment aid and incentives in Spain
- 5 Labor and social security regulations
- 6 Intellectual property law
- 7Legal framework and tax implications of e-commerce in Spain
- AI Annex I Company and Commercial Law
- AIIAnnex II The Spanish financial system
- AIIIAnnex IIIAccounting and audit issues
- State incentives for training and employment
- State incentives for specific industries
- Incentives for investments in certain regions
- Aid for innovative SMEs
- Preferred financing of the Official Credit Institute (Instituto de Crédito Oficial or ICO)
- Internationalization incentives
- EU aid and incentives
3. State incentives for specific industries
3.3. Audiovisual industry
One of the priority objectives of Cinema Law 55/2007 is to bolster the promotion and development of the production, distribution and showing of films and audiovisual works, as well as to establish terms favoring their creation and dissemination and to adopt measures for the preservation of film-making and audiovisual heritage.
Apart from the tax incentives applicable to the film-making industry, the following are some of the main incentives included in the Cinema Law and in Royal Decree 1084/2015, of December 4, 2015, which approves its regulatory implementation (recently amended by Royal Decree 1090/2020, of December 9, 2020), as well as in Order CUL/2834/2009, of October 19, 2009, in Order CUD/769/2018 of July 17, 2018, and in Order CUD/582/2020, of June 26, 2020, in connection with the acknowledgement of film costs and producers’ investments, the establishment of the terms of reference for state aid and the structure of the Administrative Register of Cinematographic and Audiovisual Enterprises.
In general, motion pictures or other audiovisual works, including those made under the regime for co-production with foreign companies, which intend to benefit from these incentives, must either have Spanish nationality or be in a position to obtain it by meeting the requirements for access to Spanish nationality pursuant to article 5 of Law 55/2007, of December 28, 2007. In this connection, works made by a Spanish production company or a production company from another EU Member State established in Spain, which had previously obtained the appropriate certificate from the competent body, are deemed to have Spanish nationality.
In the case of works made under the regime for co-production with foreign companies, incentives are available only to the Spanish co-producer or co-producer with registered office or permanent establishment in Spain, for the Spanish participation in the co-production.
In fact, one of the obligations imposed, in general, on all beneficiaries is to have their legal residence or establishment in Spain at the time of the actual receipt of the aid.
When the eligible activity is to be carried on jointly by various legal entities, in order to obtain the status of beneficiaries they must form a grouping of companies that will act through a designated representative entity with power of attorney to act in the name and for the account of all members of the grouping, not only for the purpose of submitting the aid application and the supporting documentation, but also for the performance of the obligations resulting from the grant of the aid and its justification. The grouping can therefore not be dissolved until the statutes of limitations on recovery action and on the infringements envisaged in the General Subsidies Law have lapsed.
The structure of the aid system is as follows:
Creation and Development
Line of aid
Eligible for aid
Maximum amount (€)
|Scriptwriting of full-length motion projects.||Projects for the preparation of full-length motion picture scripts which comply with the terms of the call for aid applications and are evaluated on the basis of certain criteria (i.e. originality and quality, the film’s viability, etc.).||€40,000 per project.|
|Development of full-length motion picture projects.||The expenses need to develop the projects (improve the script, search for locations, identification of cast, initial sales plans, etc.). Projects that have received aid at the script writing stage will be given preference.||It cannot exceed €150,000, provided that such amount does not exceed 50% of the budget for developing the project or of the producer’s investment. The cost of the aid will be discounted from the cost of the motion picture when determining the producer’s investment.|
|Cultural and non-regulated training projects.||Projects which are capable of enriching the Spanish audiovisual panorama from a cultural standpoint: (i) investigations or publications with particularly relevant content for the Spanish cinema and audiovisual industry or (ii) specific programs aimed at training the public.||The call will establish the maximum amount which may not exceed 60% of the project’s budget. Receiving this aid is compatible with other public aid or subsidies and it will be paid in a single installment.|
|Line of aid||Eligible for aid||Maximum amount (€)|
|Production of full-length motion pictures projects.||General.||Projects that meet the general requirements to qualify for beneficiary status (residence or establishment, suitability, relations with creative, artistic and technical staff compliant with applicable rules, reservation quotas, etc.) and that meet the requirements and conditions established by the common rules for general and selective aid (proven cultural nature, certain financial support, universal accessibility measures, etc.).||The maximum amount of the aid will be established in the call, within the annual credit allocated to the aid, which can be up to €1,400,000, provided that this amount does not exceed 40% of the cost acknowledged to the full-length motion picture by the Institute of Film-making and Audiovisual Arts (Instituto de Cinematografía y de las Artes Audiovisuales or ICAA).
A minimum of 35% will be reserved for projects directed exclusively by women and a minimum of 8% of the total budget will be reserved for animation projects, in both cases, provided that they attain the minimum points established in the call. The part of the credit not used, if any, will again be transferred to the general line.
|Selective.||Projects (i) of special cinematographic, cultural or social value; (ii) for a documentary; (iii) imade by new film makers, (iv) or of an experimental nature.|
In addition to meeting the general requirements to qualify for beneficiary status and the requirements and conditions established by the common rules for general and selective aid mentioned above, the projects must evidence a minimum percentage of financing and points. In the specific case of experimental projects, certain requirements are added in connection with the maximum budget, demonstrable experience, and the percentage of the expense which impacts Spain.
|The call for aid applications will stipulate the maximum amount of the aid which, within the annual credit used for them, can be up to €500,000, or €300,000 for coproductions with foreign companies in which the Spanish stake is a minority stake, provided that such amount does not exceed 40% of the project’s cost recognized by the ICAA (with the possibility of extending it to 70% in the case of audiovisual works considered difficult).
Within the annual credit reserved for this line, a minimum of 35% will be allocated to projects directed exclusively by women and not less than 15% and not more than 25% will be allocated to projects for a documentary. Furthermore, a minimum of 8% must be reserved for animation products, and up to 10% may also be reserved for experimental projects and a minimum of 5% for coproductions with foreign companies in which the Spanish stake is a minority stake.
These reservations will be implemented provided that the projects attain the minimum points established by the call for aid applications. The portion of the credit that remains unused will be transferred to the general line.
In the case of experimental projects, the maximum amount of the aid per project can be equal to the percentage of the cost acknowledged by the ICAA related to the applicable maximum intensity.
|Production of TV movie and documentary projects.||Projects belonging to independent producers of TV movie and documentary projects which are longer than 60 minutes and shorter than 200 minutes, and which are not to be shown in movie theaters, provided that, among other requirements, they are filmed on photochemical medium or high definition digital medium. For a project to be eligible for aid, there must be a contract or a statement of interest in the project from one or more radio or television broadcast service providers.||Calculated by applying the appropriate percentage, according to different tranches, to the amount of the budget (which cannot be less than €700,000), with maximum annual credit of €300,000, provided that such amount does not exceed the producer’s investment or 50% of the budget.|
|Production of animated series projects.||Projects belonging to independent producers of animated series projects. For the project to be eligible for aid there must be a contract or a statement of interest in the project from radio or television broadcast service providers at the state, autonomous community or EU level.||It cannot exceed €500,000 for budgets exceeding €2,500,000, and €300,000 for budgets of lower amounts. In both cases, said amounts cannot exceed the independent producer’s investment or 60% of the budget.|
|Production of short film projects.||Short film projects and short firms made by independent producers.||Its amount can be equal to the percentage of the cost acknowledged by the ICAA related to the applicable maximum aid intensity. Aid for the production of short firms based on project plans is compatible with that for completed short films, up to the maximum ceiling of €70,000 per beneficiary film.
Within the annual credit allocated to this type of aid, a minimum of 35% will be reserved for short films directed exclusively by women.
|Line of aid||Eligible for the aid||Maximum amount (€)|
|Distribution of Spanish, Community or Latin American films.||Independent distribution of full-length films and series of short films, where, in the case of foreign films, less than 2 years have elapsed since they opened in the country of origin, which, in general, were destined for distribution in movie theaters with a minimum territorial scope, their opening complying with the conditions established in the call.||The aid may subsidize up to 50% of the cost of the making of copies, subtitling and dubbing, advertising and promotional expenses, anti-piracy measures and the technical means and resources invested in order to prepare the film for persons with disabilities. For the purpose of this aid, the aforesaid costs cannot be subsidized where they have been acknowledged, in whole or in part, as an expense attributed to the producer.
Nonetheless, the maximum amount of the aid cannot exceed €150,000 per full-length beneficiary film or group of short films.
In any case, the amount received by a company within the same budgetary year cannot exceed 20% of the amount to be used in said year for this line of aid.
|For the preservation of cinematographic heritage.||Obtainment of media for cinematographic and audiovisual works, in analog or digital format, suited for the preservation of cinematographic heritage in the long term. The producers and owners of such works must undertake not to export such original medium for a minimum period of 10 years, as well as, among other requirements, to deposit the elements preserving the work at the Spanish Film Library.||The total amount will have a ceiling of €6,000, and cannot exceed 50% of the cost of making the necessary preservation duplicates.|
|For promotion.||For the participation of Spanish films in festivals.||Participation of films that have or are in a position to obtain Spanish nationality in festivals and award ceremonies of recognized prestige.||Each call will stipulate the eligible expenses to be incurred by the production company, between those inherent in the Spanish film’s participation in the events for which it was selected or to which it was invited and the minimum percentage that must necessarily be used for advertising expenses, as well as, within what is available in the budget, the total amount to be used for such aid and the maximum amounts for each one of the festivals and, as the case may be, sections and for each award.
The aid cannot exceed the cost incurred by the producer on its participation in the festival or on competing for the award.
|For the organization of film festivals and competitions in Spain.||Organization and holding by individuals or legal entities acting as promoters of film festivals or competitions of recognized prestige in Spain, and which devote special attention to the programming and dissemination of Spanish, EU and Latin American cinema, animated films, documentaries and short films, provided that at least two consecutive editions of those festivals or competitions have been held in the three years preceding the date of publication of the call for aid applications.|
Applicants must employ at least one person with a disability the degree of which is above or equal to 33%.
|To be determined in each call for aid applications. The aid cannot exceed 50% of the budget submitted for their organization and holding.|
|For the production of audiovisual works using new technologies.||Production of audiovisual works which use new technologies in the audiovisual and cinematographic field and are distributed using any electronic means of transmission which allows for the broadcast and receipt of both image and sound other than as transmitted for movie theaters, television or domestic videos.||The maximum amount of the aid cannot exceed €100,000, provided that such amount does not exceed 50% of the project’s budget.|
In any event, the ICAA is authorized to set up cooperation agreements with banks and other credit institutions with a view to facilitating and extending the financing of production, distribution and projection activities, technical industries and the video-making sector and for the development of infrastructures or the technological innovation of those sectors.
This financing alternative is materialized in various types of aid:
- Aid for reducing interest on loans granted for production aimed at facilitating cinematographic production activities for production companies which had not received aid for the production of full-length motion picture projects.
- Aid for reducing interest on loans granted for distribution and dissemination as film, video and via internet, or the technological renewal of these sectors.
- Aid for reducing interest on loans for the financing of film projection and post-production infrastructures used by enterprises, laboratories, studios and the production and post-production technical industry.
In order to confront the economic impact caused by the COVID-19 public health crisis, a number of contingency measures also approved for companies in the cultural industry by way of Royal Decree-Law 17/2020, of May 5, 2020, including measures specifically in support of film-making and audiovisual arts, which remain in force for 2021, such as the following:
- Transitional extension, until cinemas reopen, of the definition of a film’s “commercial premiere”, so that until cinemas are fully operational, it can mean premieres via television audiovisual communication services, electronic communication services that broadcast television channels and program catalogue services.
- Grant of direct subsidies to the owners of cinemas that are duly registered in the Register managed by the ICAA, to be used to defray, inter alia, expenses incurred on complying with the health and safety measures imposed on them (staff risk prevention plans, etc.) or holding promotional campaigns for the recommencement of activity that were held in 2020 and until May 2021. The amount of this aid will be linked to the number of screens that each cinema has (with a minimum of €8,000 if it has a single screen and up to €32,000 if it has more than eight).
Lastly, and also with a view to supporting the production of feature and short films in the context of the negative economic impact caused by COVID-19, Additional Provision Two of the above-mentioned Order CUD/582/2020 contains several specific measures aimed at relaxing certain rules for the processing and management of aid, such as the following:
- When it comes to evidencing the financing required by means of agreements formalized by the companies applying for aid, the minimum fundraising required of the distribution company can refer to the year 2019, if the year preceding that of the call is 2020 and provided that the applicant company so decides.
- The reduction in the percentage of expenses that must be allocated to copies, advertising and promotion for the premiere of feature films in movie theaters in Spain, where the premiere takes place in 2020: from 12% to 7% in the case of general aid and from 8% to 3% in the case of selective aid. This margin is reduced even more where the aid received is lower than 75% of the aid requested: to 5% and 2% respectively.
- The above-mentioned Order also relaxes and modifies the assessment of the applicants’ solvency, the percentages of payment of the general aid to feature films based on project plans, the years of prior production of the applicants for selective aid or the periods for assessing the viability of short film production projects.
- Eligible expenses that have been incurred by companies receiving general and selective aid for the production of feature films as a result of COVID-19 or of measures established to combat it that could not be applied to the project of the subsidy received, whether in whole or in part, are recognized as costs of the film.
- Likewise, the maximum intensity of public aid will be increased to 75% of the cost recognized for productions that received, in 2019, general or selective aid for the production of feature films based on project plans that apply for the certificate of Spanish nationality in 2020 and 2021 and that have special cultural and artistic value.