TAX SUPPORT
The Iceland tax incentive for the film industry also applies to the VFX industry.
That means that it is permissible to reimburse, from the Treasury, 25% of production costs incurred during the production of films, television programming or VFX in Iceland. The definition of production costs include pre-production, production, and post-production. Additionally, there is also the possibility to enhance the funding allocation by allocating 35% of the funds specifically to projects that adhere to supplementary criteria outlined below.
The reimbursement calculation is based on the total cost of producing films, television programs or VFX, irrespective of which phase of the production generates that cost.
When do we have to apply?
An online application form for reimbursement of production costs for film projects shall be submitted at Icelandic Film Center website before production begins in Iceland, that means before the company starts to work on the project. (For example: e.g. If an applicant has already completed (or is conducting) principal photography abroad and is interested in sourcing post work from Iceland (VFX, editing, mastering, grade etc.), that scope of work would still be eligible for reimbursement even if main production started some time prior)
Production refers to the project that applies for the grant. So it is permitted to apply for “insert” projects in any production stage and technical type of production.
How long does it take from applying until there is a response? – Information about LOI/LOC.
Once the application form has been sent, the evaluation committee reviews it. The committee holds meetings every two weeks. Then, if the application is approved, the committee sends a LOC (letter of commitment) with a validity of 3 years and with a possible extension of 2 years. If the amount of the budget changes we must update the new budget to the committee. There is no maximum budget for this reason it is essential to update and send to the committee the new information.
25% or 35%. What is the difference?
The Icelandic reimbursement scheme is essentially based on a 25% reimbursement with a possible spike for given conditions referring to a minimum budget, staff numbers and shooting days.
25% Reimbursement
ll productions for feature films, TV shows, documentaries and VFX in Iceland are eligible for a 25% refund. For the 25% reimbursement there is no requirement for a minimum:
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production budget
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number of staff working on the project
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number of shooting days
Hence it is possible to apply for a reimbursement for a project that involves only post production or RVX production elements, without reference to shooting days,minimum staff or budget.
35% Reimbursement
To receive 35% refund, a production must fulfill three requirements:
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Costs incurred in Iceland must be a minimum of ISK 350 million.
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The project must have a minimum of 30 working days in Iceland, consisting of shooting days or post-production days. Of the 30 working days, a minimum of 10 shooting days in Iceland is required.
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The number of staff working directly on the project shall be 50 at a minimum. It is a requirement that payments to those 50 employees shall be taxed in Iceland.
For all productions, when more than 80% of the total production costs are incurred in Iceland, the reimbursement is calculated based on the total production cost incurred within the European Economic Area (EEA)
Project evaluation
Applications must conform to requirements and a project evaluation scheme in order to receive a LOC. The Project evaluation is based in (cultural criteria + production criteria) that gives you the necessary points to be accepted. Cultural section (16 points total) and the production section (30 points total). The
Project must score a minimum of 4 points from the Cultural Criteria and receive a minimum of 23 points overall out of a possible total of 46 points.
Cultural (the central theme of the film is based on events that are a part of Icelandic or European culture, history, mythology, and religion. A character or personality from Icelandic or European Culture, Storyline of the film is connected with an Icelandic or European setting, place, location, architectural or cultural setting, literary work or adapted from another artistic discipline (fine arts, music, etc.) of cultural importance, focuses on current cultural, sociological, political themes in Icelandic or European society, Film reflects significant Icelandic or European value(s), such as cultural, diversity, solidarity, equality, protection of minorities or human rights, tolerance, environmental protection, respect for cultural or family traditions, respect for nature and sustainable use of natural resources, Film focuses on Icelandic or European culture, identity or Icelandic or European customs and traditions…)
Production (Film is a cinematographic work that contributes to the development of its genre; Film is suited to increase the capacity of the filmmakers involved to undertake ambitious and demanding projects of cultural value. The filmmakers are Icelandic citizens or citizens of EEA member states Half a point is awarded for each topic below but a maximum of 3 points: Director, producer, DOP, scriptwriter, lead actor, supporting actor, composer, production designer, costume designer, editor, makeup artist etc…), Final version of the film is in any language of the EEA. At least 51% of the crew (excluding those in Point 11) are citizens of EEA countries; Shooting takes place on locations or in studios in Iceland, Production uses Icelandic service providers in Iceland, Post-production (including sound and visual post-production, laboratories, soundtrack recording, etc.) takes place in Iceland or the EEA.
Who applies?
The Icelandic company is responsible for applying. As per the procedure, you provide us with the necessary information, and we will handle the application process. About the cultural test, it is a process that the Icelandic company actively takes care of.
The Icelandic Film Center has the policy and reputation to increase transparency and clarity in procedures and operations and welcomes inquiries and questions regarding the reimbursement scheme.