Announcement of Revisions to Tax Credit Regulations by Mic and Mef, the Italian government is set to implement significant changes to the tax credit system designed for film and audiovisual productions. This reform initiative, led by the Ministry of Culture, aims to alleviate some of the inflexibilities present in the original decree, notably to counteract potentially distorting or overly restrictive provisions.
As reported by “Il Sole 24 Ore”, a corrective decree is forthcoming, with collaborative efforts between the Ministry of Culture and the Ministry of Economy to amend the interministerial decree established on July 10, 2024, N. 225, which governs these tax credits. The overarching objective is to create a more inclusive tax incentive framework that meets the evolving needs of the market. This initiative comes at a crucial juncture, with the tax credit reform finally being operational after extensive discussions lasting 18 months.
Yet, concerns have been raised by a coalition of 15 associations representing industry professionals, which has alerted the public to the current challenges faced by the sector. They launched the “SOS Cinema” campaign, highlighting the looming legal challenges some companies have filed against the reform, with the Administrative Court (TAR) scheduled to address these issues in March.
Enhancing Flexibility A close reading of the new introductory report reveals that this reform, which has been the result of months of consultations involving the Ministry of Culture and various associations, aims to tackle three core priorities: simplifying access to tax credits, rebalancing the contractual dynamics between producers and distributors, and reducing the negative impacts of the previous regulations. The modifications—which have already been foreshadowed by various implementing decrees—are now poised to be formalized in a cohesive and updated document.
One significant change is the removal of the requirement for agreements with a “primary film distribution company.” This revision responds directly to criticisms that highlighted the barriers this clause posed for independent producers. In this revised context, submission and verification of distribution agreements will now occur only at the final request stage.
Moreover, the criteria for eligibility have been eased: for projects with budgets not exceeding €3.5 million, a minimum of 240 screenings will be required, as long as they comply with existing regulations. This seemingly minor adjustment provides a vital boost for niche filmmakers or those with limited resources. The stipulations regarding funding sources are also being refined: producers must now demonstrate that at least 40% of the total costs are secured from private sources (30% for documentaries and 50% for television productions).
Reinvestment Obligations and Penalties Central to this reform is the requirement for producers to reinvest a portion of their tax credits. Producers will have a five-year period to allocate these funds towards new audiovisual projects or the acquisition of goods essential for production. The Director General of the Ministry of Culture will also redefine what constitutes the portion of the tax credit that must be reinvested, along with the technical guidelines and procedures for verifying compliance with this obligation. Non-compliance carries significant repercussions: producers who fail to meet the reinvestment requirement risk being barred from tax benefits for a span of five years—a penalty designed to ensure adherence.
Rebalancing Rights in Contracts Another pivotal aspect of the reform focuses on restoring equilibrium in the contractual arrangements between independent producers and distribution entities or broadcasters. The conditions for producers working with major companies like Mediaset and Rai, as well as streaming platforms, are being standardized. Previously, producers enjoyed certain advantages working with traditional television channels; however, the new framework ensures that the original independent producer retains complete and unconditional rights for both pay TV and video-on-demand under specific circumstances. In cases involving the priority exploitation of free-to-air television, the independent producer keeps full rights for pay TV and associated catch-up services, alongside a modified maximum holdback period, increased from 12 to 18 months.
Moreover, if the free-to-air rights are transferred, this can only happen six months post the initial airing of the content. These revisions are poised to create a more equitable and supportive framework for Italy’s audiovisual industry, fostering a sustainable environment for creators and distributors alike.
