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This is the case of Life Itself, Clash of the Titans,Bourne, Exodus: Gods and Kings, Fast & Furious 6 and Wrath of the Titans, among many others. According to data published by the Spanish Ministry of Culture and Sports, given the current dynamics of the Spanish film industry, co-productions are gaining momentum year after year. In particular, during the period 2005-2015, 560 Spanish feature films were shot as co-productions with foreign countries.
Cinema Law 55/2007, dated December 28, 200 and Royal Decree 1084/2015, dated 04 December 2015, implementing Law 55/2007, were clearly aimed to promoting international co-productions.
The Spanish legislator placed special emphasis on regulating more flexibly the requirements needed for the approval of co-productions, as well as the steps, procedures and conditions enabling films shot as
co-productions with foreign countries to obtain Spanish nationality and, accordingly, to qualify for the financial aids and grants provided therein.
However, it is also true that, in Spain, aid and tax incentives for co-productions with foreign companies are regulated in such a way that only a Spanish producer, or a producer with an address or a permanent establishment in Spain (i.e., the Spanish co-producer) can apply for them. To calculate the specific amount of this aid for international co-productions, only the costs incurred by the Spanish co-producer/s will be taken into consideration. International co-productions could represent up to EUR1 million (EUR1,000,000) if all necessary requirements are met.
All of the foregoing is without prejudice of any aid accessible f or the same film by the other foreign
co-producers pursuant to their applicable domestic regulations.
The role played in Spain by the Film and Audiovisual Arts Institute (Instituto de la Cinematografía y de las Artes Audiovisuales; ICAA), an agency under the Secretariat of Culture of the Ministry of Education, Culture and Sports, in the implementation of the policies aimed at promoting film is equally significant.
The aid granted by the ICAA to film production includes aids and subsidies for feature films and short films; for screenplay development; for the participation and promotion of selected films in international festivals, and for the amortisation of feature film costs, calculated with respect to their box office and tax credits for investment in film and audiovisual productions, etc.
From a strict economic standpoint, co-productions undoubtedly have advantages for European film producers, such as:the shared contribution of financial resources, access to public aids and tax incentives, increase in the film’s potential market, audience and advertising, including merchandising, memorabilia and product placement. Advantages also include more competitive production costs, depending on the participating countries, access to foreign locations, new skills learned from foreign professionals and
From a purely cultural standpoint, international co-productions contribute to the production of multi-cultural films and the creation of a network of producers and distributors, all of which will facilitate the development
of a film industry with a greater socio-cultural exchange.
Focusing on international productions with a Spanish co-producer, it is important to bear in mind that the fundamental contractual core of this type of transactions is the co-production agreement executed by and among co-producers from two or more countries.
By means of the co-production agreement, the co-producers agree to cooperate and share assets, rights and/or services to complete the production of an audiovisual work, of whatever type or genre. The agreement includes allocating to each other the ownership of the rights to the audiovisual work and recording resulting from their cooperation, exploiting it jointly and sharing its profits or losses in the agreed percentages.
It is, therefore, a framework agreement that presents the rights and obligations of the parties and the basic terms on which the films produced are deemed to have the nationality of each co-producer, therefore, obtaining the benefits envisaged under the related legislation (tax incentives, tax credits, aids or subsidies).
However, the terms and conditions of production agreements, not to mention the legal nature of the co-production, can be extremely varied depending on the different contractual structures available to the co-producers. Accordingly, the consequences and, as the case may be, the risks inherent to those structures can also be quite diverse, advising for specialised legal and tax advice in advance.
In particular, in order to obtain benefits under Spanish legislation, audiovisual works produced as co-productions must obtain Spanish nationality and, consequently, a certificate of Spanish nationality.
A certificate of Spanish nationality is granted by the ICAA after it has assessed the contents of the work
and evidences that an audiovisual work meets the requirements for being treated as a Spanish work of Spanish nationality.
The importance of this certificate goes beyond the possibility of obtaining aids or protection from the Spanish government, given that producers of films possessing this certificate can aspire to present their films in a number of national film festivals (such as the well-known Goya Awards).
In this connection, pursuant to the Cinema Law, the Spanish nationality work shall be presumed if: (i) it is produced by a Spanish production company or a production company from another EU Member State established in Spain, to which, as indicated, the certificate of Spanish nationality has been issued; and (ii) it is produced as co-production with foreign companies in accordance with their specific legislation.
The requirements to be met by a film to successfully apply for the certificate of Spanish nationality are summarised below.
Firstly, the film must have been produced by a Spanish production company or by a production company from any other EU Member State, established in Spain. The stated company must be registered in the Administrative Register of Film and Audiovisual Companies (Registro Administrativo de EmpresasCinematográficas y Audiovisuales), a register under the ICAA recording the individual or legal entities established in Spain, which qualify for any of the measures required by the Cinema Law and is devoted to the production, distribution, exhibition and other connected activities of the film and
Secondly, the team involved in the production of the film must meet certain requirements related to the nationality of its members, who are grouped into three different categories: (i) directors, screenwriters, directors of photography and music composers; (ii) actors and other artists; and (iii) technical creative staff and all other technical personnel.
A total of 70 per cent of each group above, must independently considered, be formed by Spanish nationals or nationals members of other EU Member State or of States party to the Agreement on the European Economic Area, or of persons who have a valid residence card or permit in Spain or in any of the aforesaid States.
The Cinema Law also stipulates a requirement regarding language, stating that the original version of the
film should be produced, preferably, in any of the official languages of Spain. Although this requirement
is not mandatory, it clearly serves as a preference criteria which, if not complied with, must be
The Cinema Law stipulates also a final requirement that could be referred to as a “territorial requirement”, according to which the filming, post-production and laboratory work of the film must take place in Spain or in another EU Member State, unless the screen play effectively demands otherwise.
As in the preceding case, this requirement is not absolutely mandatory, since the interpretation of what may or may not be demanded by the screenplay is obviously very subjective, but the ICAA generally takes a positive view if, to the greatest extent possible, most of the filming is done in Spain or, if filmed outside the European Union, there is sufficient evidence that this was, in fact, due to demands of the screenplay.
As final remark, it is important to note that approval of the co-production project must be requested from the ICAA before the production company begins shooting the film or audiovisual work (applications filed after shooting commenced are automatically turned down), although compliance with the requirements determining nationality will be verified by the ICAA after the production has been completed.
After making sure that the requirements have been met (verification must take place within the following month after submission of the documentation and information needed for the verification), the ICAA will decide whether or not to issue the certificate of Spanish nationality needed and, therefore, make aids or incentives available.
Elena Artigas is a senior associate in the Corporate/Commercial Law practicewith a specialisation on audiovisual law matters (financing of audiovisual projects, production and co-productions orcontent distribution). She has extensive experience in advising domestic and international clients on M&A transactions, commercial contracts, joint ventures, side agreements, distribution, agency and franchising agreements, and supply contracts in the film, media and entertainment sectors. Elena holds a Law degree, Universidad Pompeu Fabra, a Master’s Degree in International Business Law, ESADE (Universidad Ramon Llull) and has coursed post graduate studies in comparative law atUniversité de Paris XIII, France. Elena is a member of the Barcelona Bar Association and the International Association of Entertainment Lawyers.
International Production With a Spanish Co-Producer
In recent years, globalisation of the market and the support of European and Spanish government agencies has helped promote and consolidate international co-productions for most of the feature films produced in Europe and, in particular, in Spain. Over the last decade, Spain has become the second-largest co-producer country, with audiovisual co-productions recognised internationally for their quality and commercial success.