Germany, Film Financing and Television Programming: A Taxation Guide

Germany, Film Financing and Television Programming

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Germany offers various incentives for the film industry and is considered to be a favorable location in this regard. Germany has three funding institutions at the federal level and various institutions at the state level for film funding. The German film funding is widely spread around the world and in this way affected Germany as a location for film business. Germany has already hosted a number of well-known international film productions such as The Bourne Supremacy (2003/2004), Inglourious Basterds (2008/2009), The Three Musketeers (2010/2011), The Grand Budapest Hotel and The Monuments Men (2013). Thus, film funding and suitable backdrops of German history contributed to the site selection. With respect to the film production and film financing business, irrespective of the tax amendments in the past years, the “media decree” is still very important for the film business. The media decree was issued by the German Federal Ministry of Finance on February 23, 2001 and amended on August 5, 2003. Besides some provisions that are (due to their nature) only applicable to the taxation of film funds and their investors, the vast majority of provisions deals with general taxation principles in connection with the production, distribution, and financing of films. Their interpretation may affect every person engaged in this business, whether a film fund or not. The qualification of new media transactions from a tax point of view, especially provided digitally, can be challenging, considering that existing tax laws were initially not developed in a digital world. The main aspects of qualification are the treatment of licenses, which may be considered as royalties, rentals, or sales, depending on the extent of limitation of the rights granted. Furthermore, the determination of the place of performance, the source of income, the kind of income, e.g., royalty, service, or sale with regard to holding tax issues, are important questions to be answered when determining the tax treatment of new media. To a certain extent, the VAT law changes affecting the media business are a result of practical challenges. As of January 1, 2015, new regulations in German VAT law are applicable and might influence the film industry. The changes in German VAT law concern the place of supplies of telecommunication, broadcasting, and electronic services to final (moss) consumers (B2C), as well as several accompanying regulations, e.g., “Mini One Stop Shop.”  

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