25% Tax Rebate for films produced in Hungary
Hungary introduced a simple and transparent tax incentive mechanism in 2004 to stimulate local film production activities. The results speak for themselves: the overall spending on film productions have increased significantly and now Hungary is among the top countries in Central Europe to host international and Hungarian film productions.
The system involves practically two main players: a company producing a film in Hungary and a Hungarian sponsor providing financial support to the film up to 20% of the eligible local production expenses.
The benefit to the production company is achieved through the 20% support received from the sponsor, while the sponsors are motivated by the tax incentives. The tax relief utilized by corporate sponsors takes the form of a tax credit with a parallel tax base deduction. In effect, the tax credit serves as compensation for financial support, and the tax base deduction represents the return on the “investment”.
Beyond the 20% rebate on qualifing Hungarian expendtirues, 20% of foreign expenditures also can qualify for the rebate. This additional rebate is maximized at 25% of local expenditures (20%+5%=25%)
It is the role of the National Film Office to verify the production’s invoices and afterwards to issue the Tax Certificate(s) to the sponsoring company. Once the certification is issued, the sponsoring company transfers the money to the production.