Italy Unveils Revised International Tax Credit

Interview with Lucia Borgonzoni, Italy’s Undersecretary of State to the Ministry of Culture

Lucia Borgonzoni, Italy’s undersecretary of state to the ministry of culture, finally unveiled the details of the country’s revised international tax credit at the Venice Film Festival last week.

Key Changes for the International Industry

It is a priority for us to bring foreign capital to our country with productions capable of generating wealth and related activities. The overall structure has remained unchanged, starting with the basic rate at 40%. The tax credit is granted within an annual maximum limit of €20m for each company or group of companies, while there is no maximum limit per work.

However, we decided to introduce some new measures such as, for example, some limitations to the use of AI, compliance with collective agreements for workers, and compliance with the protocol against harassment. The requirement to carry out at least one day of filming/work on Italian territory has been cancelled, a new, long-awaited provision by post-production companies. We have also established the benefit is granted provided the eligible cost is at least €250,000.

Why Regulate AI in the Tax Credit?

Because it is important for us to protect the creativity of artists by guiding in a clear and regulated manner a process of technological innovation that is already profoundly changing all the stages of filmmaking.

The audiovisual industry represents a very fertile ground for the development of artificial intelligence. This process has such a huge potential so much so that every day we get news of new applications.

At operational level, we have provided for the non-eligibility of costs incurred in the national territory relating to the use of artificial intelligence, except for the use of artificial intelligence connected to special effects under the heading ‘main actors’. The provision only concerns the Italian executive producer.

To ensure maximum transparency, we have included the obligation to disclose the stages of the work carried out on the national territory for which artificial intelligence was used, as well as the obligation to provide for in the contracts between the Italian executive production or post-production companies and the filmmakers, cast and crew, specific clauses allowing them to deny their consent to the exploitation of their work/image/professional performance by artificial intelligence systems.

Hopes and Expectations for the Revised International Tax Credit

I want to give you some figures that demonstrate the great attractiveness of this instrument. Between 2016 and 2023, 354 films and TV series (mostly of US or UK origin) applied for international tax credits for a total of more than €878m of credit. The total investment generated in this timeframe was huge: €2.38bn.

This is the most ‘industrial’ leverage we have available in our law and we intend to strengthen it further in the coming years. This is confirmed by the fact the American majors themselves, which I regularly meet with to exchange views and opinions on the sector, always show great enthusiasm, testifying to the competitiveness of this formidable tool. Moreover, these incentives have already led many international productions to shoot in our Cinecittà studios, which, as is well known, is the beneficiary of significant funding under the National Recovery and Resilience Plan (PNRR) precisely in order to modernise and expand its studios.

Application Process and Timeline

The deadline has not changed. The final application must be submitted within 180 days from the conclusion of the activities.

By the end of September, the inter-ministerial decree will be published (we have already received the green light from the Ministry of Economy and Finance and are waiting for the opinion of the Ministry of Enterprise and Made in Italy). Within this year it will be possible to file applications.

Conclusion

The revised international tax credit is an important step forward for the Italian film and audiovisual industry, and we are confident that it will continue to attract foreign investment and support the growth of the sector.

FAQs

Q: What are the key changes for the international industry?
A: The key changes include limitations to the use of AI, compliance with collective agreements for workers, and compliance with the protocol against harassment.

Q: Why regulate AI in the tax credit?
A: To protect the creativity of artists and guide the process of technological innovation.

Q: What are your hopes and expectations for the revised international tax credit?
A: We hope to attract more foreign investment and support the growth of the sector, and we expect the credit to be a competitive tool for international productions.

Q: When will it become law and open for applications?
A: By the end of September, the inter-ministerial decree will be published, and within this year it will be possible to file applications.