Film Scheme

A natural studio.

Film Scheme in Cyprus

The government of the Republic of Cyprus introduced a package of incentives encouraging international producers to choose Cyprus as their next film destination. In specific, production companies that opt to Film Scheme in Cyprus will be able to choose between cash rebate or tax credit and can also benefit from tax discounts on investments made on equipment and infrastructure, and VAT returns on expenditure in scope.

Qualifying production categories include, amongst others, feature Films (including animation), television Series or mini-series, documentaries for Theatrical or Television release, animation (digital or analogue), television research programs and natural history.

Location and Cyprus landscapes.

Located at the eastern end of Europe, Cyprus, is at the crossroads of three continents, Europe, Africa and Asia in close proximity to diversified civilizations and settings. Its pleasant Mediterranean climate offers year-round sunshine making it possible to enjoy the sun every single day.

The stunning coastlines, golden sandy beaches and clear blue waters coexist harmoniously with glorious mountains of wild natural beauty and peaceful, picturesque villages making the island a unique natural film studio in itself.

Over the years, Cyprus has developed a unique character, that reflects the influence of the different civilizations that have ruled the island, leaving their mark from a Stone Age settlement to a modern and thriving European Union State.

Incentives for film producers.

The aids of Incentive I are based on article 54 of Regulation (ΕU) 651/2014. The annual available sum for this aid shall not exceed €25,000,000. The aid shall be granted based on the following parameters and pre-requisites:

  1. The application must be submitted by the Applicant.
  2. The maximum aid shall represent 35% of the eligible expenditure made in the Republic of Cyprus.
  3. Minimum expenditure in the Republic of Cyprus which amounts to at least €200,000 in the case of feature films (long films), €100,000 for television drama series or self contained drama films, €50,000 for documentaries for television or cinema broadcast and €30,000 for other television programmes (or the equivalent in any other freely convertible currency). It is noted that in any case of minimum expenditure in the Republic of Cyprus, the above amounts should not exceed 50% of the total production budget.
  4. For a production to be eligible for aid, the Applicant must satisfy certain criteria, which will ensure that the aid promotes, amongst other, the Cypriot and/or European and/or world culture. The proposed cultural criteria are defined in Appendix 3 A, Form 3 of the present.
  5. The aid sum shall be payable with the completion of the shooting of the scenes and following the accounting check of the Eligible Expenditure for Production which will be submitted to the Committee and a Final Approval Certificate will be issued. The sum shall be paid within 90 business days following the date of issuance of the Final Approval Certificate.

Companies Facing Financial Difficulties are excluded from the Scheme.

This measure constitutes an aid (as a reduction of the applicable corporate tax) for the Applicant. The aids of Incentive II are based on article 54 of Regulation (ΕU) 651/2014. This aid shall be granted based on the following parameters and pre-requisites:

  1.  The application must be submitted by the Applicant.
  2. The maximum aid shall represent 35% of the eligible expenditure made in the Republic of Cyprus.
  3. Minimum expenditure in the Republic of Cyprus which amounts to at least €200,000 in the case of feature films (long films), €100,000 for television drama series or self contained drama films, €50,000 for documentaries for television or cinema broadcast and €30,000 for other television programmes (or the equivalent in any other freely convertible currency). It is noted that in any case of minimum expenditure in the Republic of Cyprus, the above amounts should not exceed 50% of the total production budget.
  4. The Applicant must satisfy certain criteria, which will ensure that the aid promotes, amongst other, the Cypriot and/or European and/or world culture. The proposed cultural criteria are defined in Appendix 3 A, Form 3 of the present.
  5. The sum to be deducted from the taxable income shall not exceed 50% of the Applicant’s taxable income for the tax year within which the production is made. The credit, to the extent that it is not granted due to the above percentage restriction, shall be carried forward and be paid within the next five (5) years, subject to the above percentage restriction.
  6. The tax credit is not transferable to any third person. In the event of voluntary or involuntary liquidation or dissolution of the Applicant, the tax credit automatically ceases to have any value in the assets of the legal person to which it was granted.

Companies Facing Financial Difficulties are excluded from the Scheme.

1.Every Applicant investing in film production infrastructure and technological equipment such as filming studios, audiovisual processing premises, filming equipment, digital audiovisual means, etc., shall be entitled to have the sum of his investment deducted from his taxable income. The relevant application form for tax deduction can be found on the Committee’s website.

2.The aid cannot exceed 20% of the Eligible Expenditure in the case of small enterprises and 10% of the Eligible Expenditure in the case of middle-sized enterprises.

3.The investment, in the case it relates to equipment, must remain within the Republic of Cyprus for a period of at least 5 years.

4.Eligible Expenditure for the particular tax deduction are the investment expenditure in tangible and intangible assets (“Eligible Infrastructure and Equipment Expenditure”)

5.In order for an investment to qualify for Eligible Infrastructure and Equipment Expenditure, it must consist of:

a) investment in tangible and/or intangible assets in relation to the creation of a new business establishment, the expansion of an existing business establishment, the modification of the production of a business establishment with new additional products or the fundamental change of the whole of the production process of an existing business establishment, or

b) acquisition of assets belonging to a business establishment, when all of the following pre-requisites are satisfied:

  • the business establishment has closed or would have closed if it had not been bought,
  • the assets are bought by third parties who are not related to the buyer, (this term does not apply in the event where a family member or an employee of the initial owner takes over a small enterprise)
  • the transaction is effected on market terms. A simple buy out of the shares of a business does not constitute an investment.

6.The intangible assets must meet all of the following pre-requisites:

  • They are only used in the business establishment to which the aid is granted;
  • They are considered as depreciable assets;
  • They are purchased in accordance with market terms by third parties that are not related to the buyer;
  • They are included in the assets of the enterprise for at least 3 years.

7. The job vacancies that are directly created must satisfy all of the following prerequisites:

  • they are created within three years from the completion of the investment;
  • there is a clear increase in the number of employees in the particular business establishment, compared to the average of the preceding twelve months;
  • they are preserved for a minimum period of three years from the date when the vacancy was filled for the first time.

- Companies Facing Financial Difficulties are excluded from the Scheme.

- For the implementation of the above, the sums paid by small and medium-sized enterprises (“SMEs”), shall be deducted from the gross income. The deduction, to the extent that it cannot be granted due to the above restriction, shall be carried forward and be granted during the next five (5) years, subject to the above paragraph (b) of percentage restriction.

With respect to Incentive Ι, Incentive ΙΙ and Incentive ΙΙΙ above:

In determining the amount of cash rebate and tax credit, as the case may be, the Committee shall take into consideration all possible state subsidies, including aid provided by other EU Member States, in order to ensure that state aid does not exceed fifty percent (50%) of the total production budget and sixty percent (60%) for a co-production pursuant to the relevant EU Regulation. To this end, the Producer shall state any other aid.

Value Added Tax rates in the Republic of Cyprus are 19%, 9% and 5% on all products and services provided within the Republic of Cyprus and 19% and 5%, on all taxable imports.

The Applicant is entitled to VAT return in relation to any expenditure, as every natural or legal person in a Member State of the EU has, in accordance with the European Directive 9/2008 of 12 February 2008. With respect to natural or legal persons from third countries that transact with the Applicant, such persons are not entitled to VAT return except in the cases of persons from Israel, Norway and Switzerland, countries with which the Republic of Cyprus has already signed interstate agreements.

In the respect, the Competent Authority shall study the promoting of Interstate Agreements for mutual VAT return with the following countries: Russia, China, India, Ukraine, Canada, Australia, Japan, New Zealand, Thailand, Egypt and the United Arab Emirates.

With respect to the United States of America, where no VAT is applied but only Sales Tax that is non refundable, the Competent Authority may examine the introduction of relevant measures.

VAT returns arise within 6 months with respect to the legal person who carries out the foreign filming production in Cyprus from the end of the last deadline for submitting the VAT declaration for the specific VAT period during which the expenditure occurred or from the date on which the application for VAT return is filed.

For VAT returns the relevant provisions of the VAT Law Ν. 95(Ι)/2000 apply. In addition the provisions of the Regulatory Administrative Act 316/2001 with respect to exceptions apply.

Short travel distances

Variety of captivating landscapes

More than 300 days of year sunshine

Art and culture.
Historical monuments.

Geographical location

Fiilmography background and production companies.

Compliant forms of Films with the scheme.

Within the framework of the Scheme, proposals which are considered complete in relation to the programme and the selection criteria, with an attractive, cultural / social character and with a professional presentation which can be considered as “compliant production” with respect to the financial incentives of the Cash Rebate Scheme or the issuance of 14 the Tax Credit Certificate, shall be assessed. The proposals for examination can include:

Including those direct-to-video shot, where the project is a film commonly screened as the main attraction for the public in commercial cinemas with a duration of at least 60 minutes or, in the case of a large format (IMAX) film, of at least 45 minutes.

  1. Television film As a drama (i.e. a composition which tells a story through the development of theme and plot, dialogue and action, portrayal of characters, settings of the play and the projection of relevant life situations) of a form like the characteristics of a long film capable of being broadcasted on television. The television movie is not less than one commercial television hour in length, or, in the case of a programme that predominantly uses analogue or digital animation technology and/or stop motion animation, not less than half a commercial television hour and is shot and processed to commercial release standards, for cinema exhibition or international television broadcast.
  1. Television series or mini-series It consists of an episodic television drama, including animation, which is either an extended but self-contained drama made for television, incorporates the main dramatic elements of the character, theme and plot that are developed and concluded so as to form a narrative structure (similar to that of a novel) and which features a major continuous plot enhanced by minor plots and there is the expectation of an ending that resolves the tensions of the major plot and is arranged into consecutive episodes for screening purposes, or constitutes an anthology of drama works for television where the main dramatic elements of the characters, theme and plot are introduced, developed and concluded so as to form a narrative structure within each episode (similar to that of a novel or short story), but there is no continuity of plot between the episodes (although they may include common elements of the central idea and theme in each episode) and is shot and processed to commercial release standards for international television broadcast. The number of episodes for the television series or mini series shall not exceed 15 episodes per year or six hundred minutes per year.

Full feature and television animation for international distribution, produced whether on computer or otherwise, but excluding computer games.

Where the project is based on an original theme which contains a specific “timeless” element so that there is no loss of interest when the event with which it may be linked has passed and contains significant original filming and is not limited to the reporting of information through purely reportage.

In Transmedia and Crossmedia film productions, that use different media for introducing the same story, each media makes a contribution to the whole. TransMedia and CrossMedia projects related to the production of a film are considered to be compatible with the cash rebate or tax credit scheme.

Films that promote the beauty and culture of the Republic of Cyprus simultaneously with examining the way of life of people under specific circumstances which do not reduce the personality of the people participating, do not insult the customs and culture of Cyprus and are consistent with the general framework of this Scheme, are likely to be permitted by the Competent Authority.

  • Any public or special performance(s) organized for filming or other purpose
  • Any sporting event
  • Television game shows other than reality programmes
  • Current affairs programmes or talk shows
  • Educational Programmes presenting/explaining hobbies, projects, etc.
  • Review, Magazine-style or lifestyle programmes.

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