Anyone who visited the EFM Berlinale 2023 film festival market area noticed that the most advertised topic was the national cash rebates, a.k.a. production incentives. The bigger the percentage, the bigger the sign to advertise that country. While Finland is offering a respectable 25 % cash rebate in 2023, it still has room to improve its position on the list of over 100 countries offering various production incentives for audio-visual productions.
Wed 31th of May 2023
Let’s review what cash rebates are and why they are so important for both film makers and countries giving them. Cash rebates’ fundamental role is enticing filmmakers to come to a specific country for their productions. Though trolls claim on social media that it is a waste of taxpayers’ money to give cash rebates to film makers, the economics prove otherwise. Audiovisual productions boost the local economies and are worth millions of euros. And that is also why hundreds of countries and regions highly seek them. It just makes business sense.
What kind of cash rebates are available?
Over 200 different cash rebate models are available in various countries and their local regions. While national cash rebates are concerned about getting the productions into their country, regions are luring those productions into their local area. Filmmakers then can get different cash rebates, depending on where they decide to go.
Each country has its own rules for how the cash rebate works. Some require application upfront and others afterward. All of them require proof of local spending in one way or another. While Finland has introduced a 25% cash rebate in 2023, other countries are already boasting 25-40% incentives, which gives tough competition to Finland. It is also possible to get up to 35% in Finland by combining a national 25% incentive with a regional 10 % incentive. This will take Finland to the world’s top tier of production incentives. However, some countries offer higher cash rebates and appealing locations.
Finland vs. Scandinavia
For example, Iceland has a highly intriguing landscape with active volcanos, mountains, and dramatic scenery. Their cash rebate varies between 25-30%. Norway also boasts impressive landscapes and offers a 25 % cash incentive. While Finland may not have similar landscapes, it has thousands of lakes, massive forests, swamps, and 24-hour light or darkness. Finland is the third most Northern inhabited country in the world; and offers a 25% national cash rebate. Finland also has lower production costs (i.e., staff costs) than other Scandinavian countries.
Sweden, which has a thriving film industry, is struggling with its national cash rebate system. They offered a 25 % incentive in 2022 but ran out of budget in just one day. While Finland offers a similar level, a 10 million euros total budget for the incentive, it has not yet run out of its budget. That is both good and bad news. It is good news for those still wanting to receive a cash rebate in 2023. But it is bad news for Finland that there hasn’t been as much demand as in Sweden.
What is there to learn for Finnish political decision-makers? You should increase the national budget to more than 10 million euros to avoid running out of it yearly. This budget is easily used up by just a few bigger productions coming to Finland. This will lead to an awkward situation like in Sweden… and tarnish Finland’s global reputation as a filming destination.
Therefore, the annual budget of the AV production incentive (EUR 10 million) is one of the key challenges for political decision-makers to resolve. The Finnish incentive system’s budget is too low, especially compared to Iceland, where there is no upper limit, or Greece, with a sum of EUR 75 million. The Finnish budget is typically fully allocated already by the middle of the year, which is horrendous for the productions in the latter half of the year.
According to international examples and demand for an AV production incentive, the incentive amount must be at least double the current incentive. The smallness of the budget causes uncertainty, especially in attracting major international productions to Finland. Thus, there is a major call to action for political decision-makers and lobbers to fix this for 2024. It is a great investment into the growing gross national product!
Why are cash rebates needed?
The film companies say that the cash rebates are essential for productions to come to Finland. Without it, the productions will go to other countries, no question about it. This is because making films is very expensive, and any help producers can get with managing the budget is needed. Thus, the better production incentives a country offers, the more likely it is to receive major productions. It is simple economics.
What is imperative here is that the production incentive is reliable and available for future years. It takes years to plan major productions, and if any country has issues with its rebates, they won’t be considered. Thus, it is important for the Finnish government both to keep and grow the production incentives we offer. It will ensure success as the productions shift to Finland in the coming years.
Film industry utilizes dozens of other sectors
One could argue that what is so special about audiovisual productions that they are worth subsidizing compared to other sectors, such as logistics, banking, retail, or others? While other industries would surely benefit from such cash rebates, film productions are also unique because they require a large workforce across dozens of industries. Not only filmmakers benefit from the cash rebates, but also travel, logistics, accommodation, entertainment, restaurants, shops, and others. Thus, the argument is that by supporting the AV sector, the government indirectly supports many other businesses, too.
Inari, a village in Finnish Lapland, has been filming in early 2023 one of Finland’s biggest international TV series. A series called Constellation is a psychological thriller directed by Michelle Maclaren, known for several high-profile productions, including The X-Files, Game of Thrones, and Breaking Bad. About 220 film professionals are involved in producing the series in five countries, including Finland. Production is estimated to bring about EUR 1.7 million for local service providers as the production utilizes various services such as accommodation and catering. An important reason for selecting Lapland as a filming location besides scenery was the Finnish AV production incentive, which attracts international film and television productions to Finland.
What have been the benefits of cash rebates to countries offering them?
In Finland, there have been around 20 productions per year that receive the incentive. While the size of the cash rebate has varied a lot per production, the average has been roughly half a million euros per production. The incentive has been very important for these companies receiving it, enabling them to do bigger productions. According to an industry survey, 60 % of production companies have said the incentive has significantly impacted bringing production to Finland instead of elsewhere. And therefore, all this money would have been spent elsewhere, too. Thus, production incentives clearly impact increasing revenue in the AV sector and helping companies grow.
The estimations are that each euro spent on the incentive has brought back x2-3 more money into the region. This comes through staff accommodation, catering, logistics, leisure activities, etc., required in productions.
From a quality perspective, the significant added value of the production incentive has been the experience acquired through international co-productions. The professionalism of the AV industry has grown as a result. The incentive makes it possible to hire more local talents with the best professional skills. Naturally, foreign productions want to recruit the best employees in Finland, such as production managers and assistant directors. As a result, know-how has strengthened across Finland faster than before, as the local AV industry has been able to work in bigger productions.
What is in it for Finland?
The key objectives set for the production incentives in Finland include:
Moving productions from other countries to Finland (i.e., increase the demand for AV services with foreign clients)
Increase jobs in the AV industry
Getting more Finnish AV start-ups in the market
Improve the quality of services offered
Bring foreign money into Finland
To make the above goals a reality, foreign production companies must collaborate with Finnish co-producers or production coordinator companies such as Kajawood Studios. Also, any production applying for the production incentive must have at least 25 % of the total budget in foreign cash. This is to ensure that foreign money comes into Finland.
With the cash rebates given out, estimated 4000 people have been employed annually in the industry. Another positive impact has been that the production companies can hire more permanent staff instead of project-based. This creates job stability in the AV sector. Also, companies utilizing the cash rebate have seen an average of 59 % revenue growth, while others in the same sector have only seen a 12% increase. This shows that cash rebates positively impact the national economy through the AV industry. Some estimations show that for each job in the film industry, there are 1,87 people employed through the multiplicative effect.
Incentive plays a major role
In summary, the production incentive has played a major role in getting and keeping the productions in Finland. Many productions that received the incentive would not have been realized without the cash rebate. 80 % of production companies say that production would not have happened without the incentive, and 60 % say that the production incentive had a major impact on bringing production to Finland. Thus, cash rebate has made it possible to move productions previously filmed abroad to Finland and the implementation of completely new productions in Finland. Therefore, the Finnish government must continue supporting and growing the cash rebate incentive.
Kajawood Studios helps producing music videos from concept to edit. Read about our latest music video production here!
Kajawood Studios was a co-producer of the Finnish road movie Detour to father premiered in March 2023.
The international environmental sustainability project "albert" will also be introduced at Kajawood Studios in Sotkamo.