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REGULATORY FRAMEWORK
On November 7, 2019, the Russian government adopted regulation No 1420 “On state support for film industry organisations providing services or performing work related to film production by foreign companies on Russian territory.”
WHO GRANTS THE REBATES
The Russian Export Centre (REC) open joint-stock company acts as an agent of the Russian Government in providing federal budget subsidies to Russian film industry organisations that provide services (perform works) related to the production of audiovisual content by foreign entities on the territory of the Russian Federation.
REC is a state institution in charge of supporting non-resource exports. It provides Russian exporters with a wide range of financial and other services, including help with organising export supplies, legal support of deals, currency control, analytical research, adaptation of promo materials and organisation of marketing events for product promotion. Since 2018, REC has collaborated with Russian production companies, fostering international representation of local audiovisual content.
REC invites and selects applications from film industry organisations, and approves – on the basis of an expert council’s decision –the list of successful applicants ranking them in descending order on the strength of their scores in a qualification test.
In 2021, a total of RUB 100m has been allocated for these subsidies.
WHO QUALIFIES FOR A REBATE
A film industry organisation registered on the territory of the Russian Federation and carrying out operations in compliance with the federal law “On state support for the Russian Federation film industry” that renders services (performs works) related to a foreign production of audiovisual content on the territory of the Russian Federation on the basis of an export contract signed with a foreign producer of audiovisual content.
Mandatory requirements for film industry organisations:
– the film industry organisation is not a foreign legal entity or a Russian legal entity which has foreign legal entities participating in its authorised (joint stock) capital that are registered in a country or territory on the Russian Finance Ministry’s list of countries and territories offering a preferential tax regime and/or not requiring disclosure of information on financial operations (offshore zones) involving said legal entities;
– the film industry organisation is not in arrears with repaying subsidies and budget investment to the federal budget, including those provided under other laws of the Russian Federation, and does not have any other overdue debt to the federal budget;
– the film industry organisation is not in the process of reorganisation, liquidation, or bankruptcy;
– the film industry organisation does not receive funds from the federal budget in accordance with other legal acts of the Russian Federation for similar purposes;
– the film industry organisation has no overdue debt on monetary obligations to the Russian Federation, as defined in Article 934 of the Budget Code of the Russian Federation.
COSTS ELIGIBLE FOR SUBSIDIES
1. Cost of purchasing
2. Writing costs
3. Direction Department costs
4. Cast costs
5. Administrative Department costs
6. Art Department costs
7. Location costs
8. Props Department costs
9. Stunts and Special Effects costs
10. Hair/Makeup and Wardrobe costs
11. Camera Department costs
12. Lighting Department costs
13. Grip and Electric Department costs
14. Sound Department costs
15. Transportation Department costs
16. Travel and accommodation costs
17. Filming equipment costs
18. Soundstages, offices, warehouses and other premises and associated costs
19. Film crew support and additional services
20. Animation and Computer Graphics costs
21. Editing and Colour Grading costs
22. Costs of transferring, storing and processing data. The subsidy cannot exceed 1 percent of the total spending on the territory of the Russian Federation
23. Fees for key creatives who are citizens of the Russian Federation during production on the territory of the Russian Federation. The amount of the subsidy cannot exceed 15 percent of the total spending on the territory of the Russian Federation
24. Organisation services. The subsidy cannot exceed 10 percent of the total spending on the territory of the Russian Federation
25. Unexpected expenses. The subsidy cannot exceed 3 percent of the total spending on the territory of the Russian Federation
26. Banking, insurance, financial and accounting services
QUALIFICATION TEST GENERAL INFORMATION
To qualify for a subsidy, an applicant must score at least 20 points in sections 1-5 of the qualification test. Extra points can be gained for additional criteria in section 6. The total number of points determines an applicant’s position on the list of subsidy recipients. In the event of an equal number of points, an organisation that has planned a larger amount of spending on the territory of the Russian Federation gets a higher position on the list.
Qualification tests differ for
– feature films and series
– documentary films and series
– animation films and series.
The standard amount of rebate is 30 percent of production costs subject to the project passing a qualification test and complying with minimum spending requirements for various kinds of audiovisual products (at least 52 minutes / 25 minutes per season for animated series):
The system operator collects applications for rebates, including qualification test data:
A subsidy can be increased to up to 40 percent in the following cases:
If a subsidy application is approved, REC signs an agreement with the Russian film company and submits the relevant data to the Economic Development Ministry, which, in turn, transfers the allocated subsidy to a bank account. Upon completion of the production, REC collects financial reporting and audits it.
QUALIFICATION TEST FEATURE FILMS AND SERIES
Section I | ||
1. | The number of days of principal photography planned on the territory of the Russian Federation (including outdoor, indoor and studio filming) | under 6 filming days – 0 points; from 6 to 12 filming days – 5 points; from 13 to 18 filming days – 10 points; at least 19 filming days – 15 points |
2. | The number of days of principal photography planned on soundstages on the territory of the Russian Federation | up to 30 percent of the total number of filming days on the territory of the Russian Federation – 3 points; over 30 percent of the total number of filming days on the territory of the Russian Federation – 6 points; |
Section II | ||
3. | At least one of the following creatives is a citizen of the Russian Federation: director; scriptwriter; producer; composer | yes – 2 points; no – 0 points |
4. | At least one of the following members of the crew is a citizen of the Russian Federation: director of photography or camera operator; production designer or art director; costume designer; film editor or assistant editor; makeup artist; sound designer; prop master; first assistant director; line producer or production manager; post-production coordinator; visual effects supervisor | yes – 2 points; no – 0 points |
5. | Citizens of the Russian Federation on the film crew make up at least 70 percent of the crew on the territory of the Russian Federation | yes – 10 points; no – 0 points |
Section III | ||
6. | The number of years the foreign producer has been in business | under 3 year – 1 point; from 3 to 5 years – 3 points; over 5 years – 3 points |
Section IV | ||
7. | The plot of the audiovisual product is based on events associated with Russian history, culture, religion, mythology, science or nature or the plot is devoted to a famous figure associated with Russian culture, history, religion or science | yes – 4 points; no – 0 points |
8. | The subject matter of the audiovisual product touches upon the life of the population of the Russian Federation | yes – 4 points; no – 0 points |
Section V | ||
9. | Computer graphics work is planned on the territory of the Russian Federation | yes – 1 point; no – 0 points |
10. | Sound design work is planned on the territory of the Russian Federation | yes – 1 point; no – 0 points |
11. | Image processing work is planned on the territory of the Russian Federation | yes – 1 point; no – 0 points |
12. | Special effects work is planned on the territory of the Russian Federation | yes – 1 point; no – 0 points |
The number of points scored in the qualification test (sections I – V): | ______ out of 50 points (but not fewer than 20 points) | |
Section VI Additional criteria for determining an applicant’s position on the list of subsidy recipients | ||
13. | Amount of spending planned on the territory of the Russian Federation | from 2 to 3 minimum spends – 10 points; from 3 to 5 minimum spends – 25 points; over 5 minimum spends – 25 points |
The number of points scored in the qualification test (sections I – V) and additional criteria * | ________ points |
* With the minimum spend on the production of a documentary film or series set at 3,750,000 roubles.
Note. Indicators for increasing the amount of subsidy from the federal budget to film industry organisations that provide services (perform work) to 40 percent of the costs associated with the production of documentary films and series by foreign producers on the territory of the Russian Federation are the following:
citizens of the Russian Federation on the film crew make up at least 90 percent of the crew on the territory of the Russian Federation;
spending planned on the territory of the Russian Federation amounts to at least 18,750,000 roubles.
QUALIFICATION TEST DOCUMENTARY FILMS AND SERIES
Section I | ||
1. | The number of days of principal photography planned on the territory of the Russian Federation (including outdoor, indoor and studio filming) | under 3 filming days – 0 points; from 3 to 5 filming days – 5 points; from 6 to 12 filming days – 10 points; at least 13 filming days – 15 points |
2. | Principal photography on soundstages on the territory of the Russian Federation | yes – 3 points; no – 0 points |
Section II | ||
3. | At least one of the following creatives is a citizen of the Russian Federation: director; scriptwriter; producer; composer | yes – 2 points; no – 0 points |
4. | At least one of the following members of the crew is a citizen of the Russian Federation: director of photography or camera operator; production designer or art director; costume designer; film editor or assistant editor; makeup artist; sound designer; prop master; first assistant director; line producer or production manager; post-production coordinator; visual effects supervisor | yes – 2 points; no – 0 points |
5. | Citizens of the Russian Federation on the film crew make up at least 70 percent of the crew on the territory of the Russian Federation | yes – 10 points; no – 0 points |
Section III | ||
6. | The number of years the foreign producer has been in business | under 3 year – 1 point; from 3 to 5 years – 3 points; over 5 years – 3 points |
Section IV | ||
7. | The plot of the audiovisual product is based on events associated with Russian history, culture, religion, mythology, science or nature or the plot is devoted to a famous figure associated with Russian culture, history, religion or science | yes – 4 points; no – 0 points |
8. | The subject matter of the audiovisual product touches upon the life of the population of the Russian Federation | yes – 4 points; no – 0 points |
Section V | ||
9. | Computer graphics work is planned on the territory of the Russian Federation | yes – 1 point; no – 0 points |
10. | Sound design work is planned on the territory of the Russian Federation | yes – 1 point; no – 0 points |
11. | Image processing work is planned on the territory of the Russian Federation | yes – 1 point; no – 0 points |
12. | Special effects work is planned on the territory of the Russian Federation | yes – 1 point; no – 0 points |
The number of points scored in the qualification test (sections I – V): | ______ out of 50 points (but not fewer than 20 points) | |
Section VI Additional criteria for determining an applicant’s position on the list of subsidy recipients | ||
13. | Amount of spending planned on the territory of the Russian Federation | from 2 to 3 minimum spends – 10 points; from 3 to 5 minimum spends – 25 points; over 5 minimum spends – 25 points |
The number of points scored in the qualification test (sections I – V) and additional criteria * | ________ points |
* With the minimum spend on the production of a documentary film or series set at 3,750,000 roubles.
Note. Indicators for increasing the amount of subsidy from the federal budget to film industry organisations that provide services (perform work) to 40 percent of the costs associated with the production of documentary films and series by foreign producers on the territory of the Russian Federation are the following:
citizens of the Russian Federation on the film crew make up at least 90 percent of the crew on the territory of the Russian Federation;
spending planned on the territory of the Russian Federation amounts to at least 18,750,000 roubles.
QUALIFICATION TEST ANIMATION FILMS AND SERIES
Section I | ||
1. | The pre-production and part of the production period (storyboarding, editing, animatics, character design) take place on the territory of the Russian Federation | yes – 5 points; no – 0 points |
2. | The number of scenes in the script envisaging any work on the territory of the Russian Federation, including layouts, animation, visual effects, visualisation (lighting and rendering), compositing, etc. The number of models in the script to be made on the territory of the Russian Federation, including models of characters, models of locations | from 10 to 30 percent – 5 points; over 30 percent – 10 points |
3. | Editing and colour grading work is carried out on the territory of the Russian Federation | from 10 to 30 percent of the total budget – 3 points; over 30 percent – 6 points |
Section II | ||
4. | At least one of the following creatives is a citizen of the Russian Federation: director; producer; scriptwriter; composer | yes – 3 points; no – 0 points |
5. | At least one of the following members of the cast is a citizen of the Russian Federation: actor voicing/dubbing a leading part; actor voicing/dubbing a supporting part | yes – 3 points; no – 0 points |
6. | At least one of the following members of the production team is a citizen of the Russian Federation: animation supervisor; character designer; director of photography or camera operator; production designer or art director; costume designer; film editor or assistant editor; makeup artist; sound designer; prop master; first assistant director; line producer or production manager; post-production coordinator; visual effects supervisor; location designer or background designer; modelling supervisor; layout supervisor; visualisation supervisor; compositing supervisor; film editor or assistant editor | yes – 4 points; no – 0 points |
Section III | ||
7. | The number of years the foreign producer has been in business | under 3 years – 1 point; from 3 to 5 years – 2 points; over 5 years – 3 points |
Section IV | ||
8. | The plot of the audiovisual product is based on events associated with Russian history, culture, religion, mythology or is an interpretation of Russia’s past, present or future; or is devoted to a historical or present-day figure associated with Russia | yes – 3 points; no – 0 points |
9. | The plot is based on a Russian literary work or is an adaptation of other artistic disciplines of cultural significance (visual arts, music, etc.) | yes – 3 points; no – 0 points |
10. | The plot of the audiovisual product is intended for children | yes – 10 points; no – 0 points |
The number of points scored in the qualification test (sections I – IV): | ______ out of 50 points (but not fewer than 20 points) | |
Section V Additional criteria for determining an applicant’s position on the list of subsidy recipients | ||
11. | Amount of spending planned on the territory of the Russian Federation* | from 2 to 3 minimum spends – 10 points; from 3 to 5 minimum spends – 25 points; over 5 minimum spends – 50 points |
The number of points scored in the qualification test (sections I – IV) and additional criteria | ________ points |
* With the minimum spend on the production of an animation film or series set at 5,000,000 roubles.
Note. Indicators for increasing the amount of subsidy from the federal budget to film industry organisations that provide services (perform work) to 40 percent of the costs associated with the production of animation films and series by foreign producers on the territory of the Russian Federation are the following:
at least 50 percent of the total amount of work, including pre-production, production and editing and colour grading, is planned on the territory of the Russian Federation ;
spending planned on the territory of the Russian Federation amounts to at least 25,000,000 roubles.
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