FINANCIAL INCENTIVES FOR THE AUDIOVISUAL INDUSTRY REGULATIONS

INDUSTRY

SUBSIDIARY LEGISLATION 478.05

FINANCIAL INCENTIVES FOR THE AUDIOVISUAL

INDUSTRY REGULATIONS

1st January, 2023

LEGAL NOTICE 17 of 2023.

The title of these regulations is the Financial Incentives

for the Audiovisual Industry Regulations.

(1)

In these regulations, unless the context otherwise

requires

"Act" means the Malta Film Commission Act;

"certificate of provisional approval" means the certificate

issued in terms of regulation 5 following receipt of relevant

application and supporting documentation and duly assessed in

accordance with the relevant Guidelines;

"Commission" means the Malta Film Commission

established by article 3 of the Act;

"Commissioner" means the Malta Film Commissioner

appointed under article 5(1) of the Act;

"completion" means the termination of filming activity,

animation or VFX together with post-production 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;

"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;

"EU Member State" means a Member State of the

European Union in accordance with the European Union Act;

"final approval" means the approval granted in terms of

regulation 7;

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"financial incentive" means the financial benefit provided

for in regulation 3;

"Guidelines" means the guidelines that may be issued by

the Commission from time to time;

"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 together with post

production in Malta;

"qualifying company" means 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 shall be made available to the Commissioner

upon the his request. Where 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 purposes 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

(1)

there shall be only one (1) qualifying

company with respect to a particular qualifying

production;

(2)

in the case of a co-production, the financial

incentive granted shall be apportioned between the co-

producers as agreed between them, or in the absence of

any agreement to that effect, in proportion to their share

in the overall budget of the qualifying production; and

(3)

any co-producers shall be jointly and

severally liable for their obligations under the Act and

these regulations

Provided further that when the qualifying company

is

(1)

a foreign qualifying company, it 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

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production; or

(2)

a local qualifying company, it shall be

either a special purpose vehicle or a company that is duly

registered in Malta as an audiovisual production

company and intends to produce a qualifying production

as its main purpose and activity;

"qualifying production" means an audiovisual production

that 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;

"Regulation No 651/2014" 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,

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)

The words and expressions which occur in the Act shall,

unless otherwise defined in these regulations, have the same meaning

as assigned to them in the Act.

(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, shall not 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 Guidelines.

(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.

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(3)

Notwithstanding the provisions of sub-regulation (1),

rebates of up to fifty percent (50%) of eligible expenditure for difficult

audiovisual works 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.

(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 specified 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 qualifying

production in Malta

Provided that if the application is submitted less than

thirty (30) working days before the commencement of the qualifying

production in Malta, it may only be accepted at the discretion of the

Commissioner.

(1)

Following the receipt of the application in

accordance with regulation 4, the Commissioner shall complete an

assessment of this application within thirty (30) working days after

which a certificate of provisional approval shall be issued

Provided that where the Commissioner requests

additional information in respect of the application, the thirty (30)

working days shall resume after the relevant information has been

received.

(2)

In case of any changes to the application presented for

provisional approval, the Commissioner shall be informed prior to the

final approval.

(1)

Where, after the submission of the application for

provisional approval, the budget of the Malta spend and estimated

eligible expenditure as indicated in the provisional certificate, increases

by over ten percent (10%) of the original estimations prior to the final

completion of the submission, the Commissioner shall be informed in

writing immediately of such changes.

(2)

If it becomes apparent that the threshold has been

exceeded, the Commissioner reserves the right to award the final

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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 which are found to be justifiable, said shall be made solely 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 5, the qualifying company shall submit its

final submission detailing expenses of the qualifying production where

a benefit is being sought as outlined in the Guidelines. A full audit of

expenses shall be carried out by an auditor.

(2)

The submission 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-regulation (1) and (2), the Commissioner shall

issue a final certificate.

(1)

The qualifying company shall ensure compliance

with the 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 of the conditions and requirements as referred to in

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

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

company 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.

When the financial incentive has been provided in terms

of these regulations to an undertaking, the Commissioner may

(1)

from time to time make or cause to be made such

examination of books, accounts, documents, premises, and all

other things 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, of the Guidelines, and the

provisional approval on which a certificate was issued are

complied with; and

(2)

request such financial statement from the

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

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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 so the Commission may

(1)

verify whether the provisions of the Act and of

these regulations have been complied with; and

(2)

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.