The Hungarian Film Production Tax Relief System: A Comprehensive Guide

The Hungarian film industry stands as a beacon of opportunity for both local and foreign filmmakers, thanks to its robust tax incentive scheme. With the recent extensions granted by the European Union, this tax relief system continues to fuel creativity and drive cinematic excellence until December 31, 2024.

Understanding the Tax Relief System:

The Hungarian film production tax relief system operates through both direct and indirect state support mechanisms. Direct state support encompasses normative, selective, and structural subsidies for local films or co-productions, while indirect state support offers tax incentives for films and related projects.

Eligibility and Incentives:

A wide array of film genres, including feature films, series, documentaries, and animations, are eligible for the tax rebate. However, adult and extreme violent films, commercials, reality shows, and daily soap operas are excluded. To qualify for the incentive, films must undergo a cultural test and demonstrate European content or cultural values. The rebate amounts to 30% of eligible film production costs spent in Hungary, with up to 25% of the eligible spend allowed to be foreign expenditure.

Types of Support:

There are two primary models for accessing the tax incentive: production services and co-productions or Hungarian films. In the former, foreign filmmakers collaborate with Hungarian production companies to reduce production costs, while in the latter, Hungarian production companies or co-producers engage domestic investors to finance the film.

Eligible Expenses and Exclusions:

Eligible expenses encompass a wide range of production costs paid to Hungarian taxpayers, including direct production expenses, wages, financing costs, and administration expenses. However, certain items such as indirect costs exceeding 2% of the overall spend, post-distribution costs, and excessive royalties and producers' fees are excluded from the rebate.

Operational Procedures:

The process entails registration with the National Film Office, submission of production details, passing the European Union cultural test, payment of registration fees, and issuance of tax certificates. Payments are made by Hungarian taxpayers to local or foreign filmmakers upon completion of production in Hungary, as per the agreed contractual terms.

The Hungarian film production tax relief system serves as a cornerstone of support for both local and international filmmakers, fostering creativity, innovation, and collaboration within the industry. By offering generous incentives, streamlined procedures, and a supportive ecosystem, Hungary continues to attract filmmakers from around the globe, ensuring the growth and prosperity of its vibrant film community.