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A draft law for cinema will increase by 60% the ad hoc state financial allocations, as well as introduce special incentives for young authors and support new cinema halls.

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Italy/ 5.3 Sector specific legislation  

5.3.6 Film, video and photography

Law 163/1965 wasthe first comprehensive law adopted in the cultural field in post war Italy. Although this law provided for all phases of the value chain – including distribution, diffusion and promotion – to be more or less subsidised by the state, the lion's share of government funding has always been absorbed by production. State contributions were allocated – ex ante, in the form of loans and grants, and / or ex post, either in the form of prizes, or automatically, through percentage contributions on box office receipts.

While this law effectively supported the Italian film industry during the first decade of its implementation, the invasion of films on private TV networks, following the end of the state monopoly on television in 1976, has been the determinant for a major drop in film consumption, and thus, subsequently, in film production, which reached its qualitative and quantitative low around the mid-1990s (see chapter 4.2.3).In order to foster quality production, Law 153/1994 introduced a special category for films classified "of national interest", which could attract public funding of up to 80% of the total costs, whereas further legislation adopted at the end of the 1990s, and in particular Law 122/1996 (see chapter 4.2.3), gave a significant boost to the production of Italian films. However, as many of these films were poor in terms of both critical reviews and audiences, a substantial agreement was reached between subsequent governments and professional circles to amend a legislation which had turned out to be too much in favour of a low risk assumption by the film producers.

This was one of the problems to be dealt with by Legislative Decree 28/2004, a comprehensive law aiming at streamlining and rationalising Law 163/1965 and all the following legislation on cinema activities, as well as at introducing substantial innovations, in particular the following:

  • the adoption of a more selective reference system, based on qualitative as well as on economic criteria, for film producers eligible for state support;
  • a higher ratio of financial participation of producers to the production costs of films classified of "national interest", by lowering the ratio of state support from 80% to 50%; and
  • the enhancement of the role of the stateownedcompany Cinecittà Holding, from production, distribution and promotion of national films in Italy and abroad, to additional strategic functions in the monitoring and evaluation of the whole system.

Although acknowledged as a step forward towards sectoral rationalisation, the law (followed by nine implementing regulations) has also been criticised, as it was felt that such a rigid reference system could act as a barrier to access for interesting but less well-known and established film producers.

The law's immediate unwanted side effect was actually the paralysis of financial allocations to cinema activities until the end of 2005, as a result of the endemic state / regional conflict. In fact, the Tuscany and Emilia Romagna regions appealed to the Constitutional Court against the Decree, for not taking into account the new concurrent competencies in the promotion and financing of cultural activities, entrusted by Constitutional Law 3-2001 (see chapter 5.1.2) both to the state and the Regions. In its Decision of 19/7/2005 the Constitutional Court endorsed the Regions' claim, thus invalidating all the allocations of funds to the film industry, decided upon autonomously by the Ministry. A new Leg. Decree 164/2005 subsequently provided for joint approval - both by the Ministry and by the State-Regions Conference- of every decision concerning the regulating and funding of film production and distribution.

Three draft laws amending Leg. Decree 28/2004 had been presented to the Parliament in the past legislation, all of them more or less based on the following key points: 1) an increase in financial support to the cinema industry, to be obtained also by extending existing measures adopted for national TV networks by Law 122/1996 to Pay TV (Sky Italia) and the new media as well (see chapter 4.2.3); 2) the introduction of new fiscal incentives in the form of a tax credit and tax shelter, the latter also in favour of companies outside the cinema and audiovisual sector, but investing in the production and distribution of Italian films.

In order to speed up their much awaited adoption, the fiscal incentives giving relief to the cinema industry were subsequently anticipated in Law 244/2007, and finally endorsed by Law 133/2008. The related implementing regulations – whose applicability was however limited to the years 2008, 2009 and 2010 – came into force through two Decrees (for tax shelters and for tax credits, respectively), adopted in May 2009.

The positive effects induced in recent years in the Italian film industry by the implementation of the above mentioned tax relief measures (see also chapter 4.2.3) – along with the pressure exercised by the film industry, with the support of the Minister for Heritage – finally persuaded the reluctant Minister for the Economy to extend these fiscal incentives to the end of 2013. As established by Leg. Decree 34/2011, the related costs – along with the increase in MIBACT's budget – have benefited from an increase in oil taxes. Again threatened with abolition, the tax credit measure – strenuously supported by the film milieu – was finally confirmed and made permanent by Leg. Decree n. 91/2013.Furthermore, Law 106/2014 increased from 5 to 10 million EUR the maximum amount of tax credit for foreign investments in Italian film production, and introduced a temporary tax credit for the restructuring and technical refurbishment of cinema hallsfor the years 2015 and 2016. Finally, the Financial Stability Law for 2016 has established the related budgetary allocation at 115 million EUR for 2015 and 140 million for 2016.

Furthermore a new draft law for cinema has been adopted by the Council of Ministries on 28 January 2015. When finally endorsed, the law will increase by 60% the ad hoc state financial allocations, by creating a Fund for the development of the cinema and audiovisual industries yearly endowed with 400 million EUR. The Fund will be financed by the state through tax income drawn from the television and audio-visual companies, and no more – as was the case for Law 122/1996, and was envisaged by previous draft laws – by the audio-visual companies themselves through given percentages drawn on their income. Funding criteria will be changed and made more automatic, by abolishing the existing prizes for films of national interest. Special incentives for young authors and for the preservation and development of new cinema halls have also been envisaged.

Such prospects of a long expected increase in the financial resources allocated to the cinema industry have been obviously very well received by film professionals: some, though, are arguing that "automatic criteria" may mean more "market oriented criteria"….

Finally, as far as our traditional state-owned film companies' system is concerned (see  chapter 1), whereas in 2009 Cinecittà Holding (entrusted with film promotion in Italy and abroad) was merged with Istituto Luce (film diffusion and production) into the new company Cinecittà Luce, Law n. 111/2011 changed once again its name into Istituto Luce Cinecittà:a new, much slimmer company, with a shrinking budget and personnel (half of the staff having been actually transferred to MIBACT's DG for Cinema).

Chapter published: 15-07-2016

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