The proposed amendments, which are also backed by the Justice Ministry, require films to undergo an evaluation of their cultural value and an assessment of the involvement of professionals from Hungary and other EU member states, to determine eligibility for the special grants.
Under the system, investors may write off from their taxes 125 percent of the value of grants they make to film productions. (Because the tax write-off exceeds the value of the grant, the grants are, in part, a state subsidy.) The grants are limited to half of production costs for most films, but up to 90 percent of production costs for low-budget films. For the latter, grants are capped at HUF 237 milllion for Hungarian productions and HUF 467 million for Hungarian-foreign co-productions.
Investors wrote off HUF 562 million from their taxes under the system in 2004, the year it was introduced. Write-offs rose to HUF 3.2 billion in 2005, then dropped to HUF 1.95 billion in 2006. As a result of the planned changes to the system, write-offs are expected to fall 15-20 percent.
