FINANCIAL INCENTIVES FOR THE AUDIOVISUAL INDUSTRY REGULATIONS *

THE AUDIOVISUAL INDUSTRY

SUBSIDIARY LEGISLATION 478.03

FINANCIAL INCENTIVES FOR THE AUDIOVISUAL

INDUSTRY REGULATIONS *

1st January, 2019

LEGAL NOTICE 67 of 2019, as amended by Legal Notice 48 of

2021.

The title of these regulations is the Financial Incentives

for the Audiovisual Industry Regulations.

(1)

In these regulations, unless the context otherwise

requires

"the Act" means the Malta Film Commission Act;

"certificate of provisional approval" means the certificate

issued in terms of regulation 7 following receipt of relevant

application and supporting documentation and duly assessed in

accordance with the relevant Guidelines;

"the Commission" means the Malta Film Commission;

"the Commissioner" means the Film Commissioner;

"completion" means the termination of filming activity

or animation or VFX in Malta of an audiovisual production and

"completed" shall be construed accordingly;

"co-production" means a qualifying production which is

the subject of a co-production agreement between two (2) or

more co-producers;

"cultural product" means an audiovisual production in

respect of which the Commissioner has established that the

content of the audiovisual production is cultural against a

predetermined list of cultural criteria;

"difficult audiovisual works" means an audiovisual

production as established by the Commissioner in accordance

with the Guidelines;

"eligible expenditure" means the items of expenditure

incurred by the qualifying company in relation to the qualifying

production that are eligible as established by the Commissioner

in accordance with the Guidelines;

*Repealed by Legal Notice 17 of 2023.

THE AUDIOVISUAL INDUSTRY

"EU Member State" means a member state of the

European Union as defined in the European Union Act;

"final approval" means the approval granted in terms of

regulation 9;

"the financial incentive" means the financial benefit

provided for in regulation 5;

"Guidelines" means the guidelines that may be issued by

the Commission from time to time;

"the Minister" means the Minister responsible for the film

industry;

"principal photography" means the filming of major or

significant components of an audiovisual production which

involves lead actors or the commencement of animation or VFX

work partially or wholly completed in Malta;

"qualifying company" means a qualifying company that

satisfies the conditions established in regulation 4;

"qualifying production" means a qualifying production

that satisfies the conditions established in regulation 3;

"Regulation" means Commission Regulation (EU) No

651/2014 of 17 June 2014 declaring certain categories of aid

compatible with the internal market in application of Articles 107

and 108 of the Treaty, as amended by Commission Regulation

(EU) 2017/1084 of 14 June 2017 amending Regulation (EU) No

651/2014 as regards aid for port and airport infrastructure,

notification thresholds for aid for culture and heritage

conservation and for aid for sport and multi-functional

recreational infrastructures, and regional operating aid schemes

for outermost regions and amending Regulation (EU) No 702/

2014 as regards the calculation of eligible costs, and by

Commission Regulation (EU) 2020/972 of 2 July 2020 amending

Regulation (EU) No 1407/2013 as regards its prolongation and

amending Regulation, and as may be subsequently amended;

"State Aid Monitoring Board" means the State Aid

Monitoring Board constituted under article 57 of the Business

Promotion Act;

"undertaking" means an entity carrying out an economy

activity;

"VFX" means visual effects.

(2)

Words and expressions used in the Act, shall in these

THE AUDIOVISUAL INDUSTRY

regulations have the same meanings assigned to them in the Act.

An audiovisual production shall be considered a

"qualifying production" for the purpose of these regulations if the

audiovisual work meets the conditions established in article 25 of the

Act, the Schedule to the Act and the Guidelines, which the

Commissioner may publish from time to time.

(1)

The qualifying company shall be the entity

responsible for all activities involved in making a qualifying

production and having access to full financial information for the total

production worldwide, which can be made available to the

Commissioner upon the latter’s request

Provided that there shall be only one qualifying company

with respect to a given qualifying production.

(2)

Provided that if the qualifying company is a

(a)

Foreign Qualifying Company, the qualifying

company shall be either a special purpose corporate vehicle or a

company which carries on, or intends to carry on in Malta, a

trade or business which is considered as a qualifying

production;

(b)

Local Qualifying Company, the qualifying

company shall have an audiovisual production as its main

purpose and activity and it shall be duly registered as an

audiovisual production company in Malta, having at least one

(1) director or one (1) major shareholder of the company who is

a Maltese, or European Union citizen;

(c)

an audiovisual studio or facility, it’s main purpose

and activity shall be animation and, or VFX and shall be duly

registered as an audiovisual studio, or facility in Malta, having

at least one (1) director or one (1) major shareholder of the

company who is a Maltese or European Union citizen.

(3)

When the qualifying production is a co-production, the

co-producers shall appoint one (1) of the co-producers amongst them

to act as the qualifying company in respect of the qualifying

production for the purpose of these regulations and the appointed co-

producer shall be deemed to be the entity responsible for all activities

involved in making the qualifying production

Provided that the co-producers shall be jointly and

severally liable for their obligations under the Act and these

regulations.

THE AUDIOVISUAL INDUSTRY

(1)

A rebate of up to forty percent (40%) of eligible

expenditure may be given as a cash grant, which shall be exempt for the

purpose of the Income Tax Act, to qualifying companies, upon

completion of a qualifying production, in accordance with these

regulations and the Guidelines

Provided that identifiable eligible costs claimed under

any other publicly funded scheme (in Malta), cannot be claimed under

this scheme

Provided further that the total State aid from which a

qualifying production may benefit under this regulation or any other

source shall not exceed the ceiling provided for in the regulation.

(2)

The level of financial incentive shall be determined by the

Commission in accordance with article 26 of the Act, the provisions of

these regulations and the Guidelines.

(3)

Notwithstanding the provisions of sub-regulation (1),

rebates for difficult audiovisual works may amount to a cash grant of

fifty percent (50%) of eligible expenditure, and shall be exempt for the

purpose of the Income Tax Act, to qualifying companies, upon

completion of a qualifying production, in accordance with these

regulations and the Guidelines.

(4)

The maximum aid incentives outlined in sub-regulations

(1) and (3) shall also apply for co-productions.

(1)

The application for the financial incentive shall be

submitted to the Commissioner by the qualifying company or its local

branch or agent in accordance with the Guidelines.

(2)

The application mentioned in sub-regulation (1) shall be

submitted together with such documentation and information as may be

required by the Commissioner, and shall include any documents and

information listed in the Guidelines.

(3)

The application shall be submitted at least thirty (30)

working days before the planned commencement of the production's

principal photography or commencement of animation or VFX’s in

Malta

Provided that if the application is submitted less than

thirty (30) working days before the commencement in Malta, it may

only be accepted at the discretion of the Commissioner.

(1)

Following the receipt of the application made in

accordance with regulation 6, the Commissioner shall complete an

assessment of this application within twenty (20) working days after

which a certificate of provisional approval shall be issued

THE AUDIOVISUAL INDUSTRY

Provided that when the Commissioner requests

additional information required in respect of the application, the

twenty (20) working days shall resume after the required information

has been received.

(2)

In case of any changes to the application submitted for

provisional approval, the Commissioner shall be informed prior to the

final approval.

(1)

If the final overall budget and overall qualifying

expenditure exceeds the estimated overall budget and estimated

qualifying expenditure as indicated in the provisional certificate, by

more than ten percent (10%), the Commissioner shall be informed in

writing.

(2)

If the Commissioner finds that the final overall budget

and overall qualifying expenditure exceed the estimated overall budget

and estimated eligible qualifying expenditure as indicated in the

provisional certificate, the Commission reserves the right to award the

final incentive on not more than ten percent (10%) over and above the

overall qualifying expenditure, as outlined in the provisional

certificate.

(3)

For the purpose of this regulation, if further allowances

are made, the financial incentives will be granted at the discretion of

the Commissioner.

(1)

Upon completion of the qualifying production in

respect of which a certificate of provisional approval was issued in

accordance with regulation 7, the qualifying company shall submit its

final documents detailing expenses pertaining to the qualifying

production where a benefit is being sought as outlined in the

Guidelines. A full audit of expenses will be carried out by an auditor.

(2)

The submission of documents mentioned in sub-

regulation (1) shall be submitted together with such documentation

and information as may be required by the Commissioner, and shall

include the documents and information listed in the Guidelines.

(3)

Following receipt of the final submission made in

accordance with sub-regulations (1) and (2), the Commissioner shall

issue a final certificate.

(1)

The qualifying company including its local branch

or agent, shall ensure compliance with conditions and requirements set

out in the certificate of provisional approval and, or the final certificate

and in the Guidelines.

(2)

If the qualifying company or its local branch or agent,

fails to meet any conditions and requirements as referred to in sub-

regulation (1), the Commissioner may withdraw its provisional or final

THE AUDIOVISUAL INDUSTRY

approval for the grant of the financial incentive. If the qualifying

company or its local branch or agent, has already received the financial

incentive and the Commissioner establishes that the conditions and

requirements as referred to in sub-regulation (1) have not been

complied with, it shall refund the Commissioner the amount of the

financial incentive received upon the Commissioner's request.

Where the financial incentive has been provided in terms

of these regulations to an undertaking, the Commissioner may

(a)

from time to time make or cause to be made such

examination of books, accounts, documents, premises and all

other things and matters of that undertaking, its local branch or

agency, as the case may be, as may be necessary to ensure that

the provisions of these regulations and of the Guidelines, and

provisional approval, and on which a certificate was issued and

are complied with; and

(b)

request such financial statement from the

undertaking, its local branch or agency, as the case may be and

as may be required.

The Commissioner shall keep, for a minimum of ten (10)

years, a database of all the financial incentives provided to, or claimed

by, undertakings in terms of these regulations in order to enable the

Commission to

(a)

verify whether the provisions of the Act and of

these regulations have been complied with; and

(b)

provide the State Aid Monitoring Board with such

information as it may require.

These regulations shall apply to audiovisual productions

in respect of which the aid was granted by 31st December 2023.