Tax Deductions in Bizkaia: Opportunities for Audiovisual Producers

Regulations on Tax Deductions in Bizkaia

In Bizkaia, Spain, the Provincial Councils approved the Foral Norm 9/2022 on November 23, 2022, which updates and expands the tax incentives for the promotion of culture (Official Gazette of Bizkaia, December 2, 2022). This norm came into effect on January 1 of the current year. The aim of this regulation is to provide a more competitive tax treatment for audiovisual productions, including foreign audiovisual productions and new digital formats, and to compete with tax regulations in other regions by increasing the tax incentives for audiovisual productions, which can reach up to 70% of the project expenses. The goal is to promote the interest in producing audiovisual works in Bizkaia, attract individuals and companies related to the sector to produce in the region, with a particular emphasis on audiovisual projects produced in Basque (Euskera). This norm has also been authorized by the European Commission, providing taxpayers with full legal guarantee and certainty. Bizkaia becomes the only territory in Spain with this authorization to provide fiscal incentives for audiovisual works, including foreign productions and new digital formats.

Who does the regulation on tax incentives for the promotion of culture in Bizkaia apply to?

The tax deduction applies to national or foreign audiovisual productions, such as feature films, short films, fiction series, animated works, or documentaries (produced for cinema), television, or new digital formats. Provided they have been qualified as having cultural significance.

How to benefit from it? 

To obtain this qualification, audiovisual productions must meet at least two of the following requirements:

1. The original version must be in an official language of the Spanish state. In the case of co-productions with foreign companies, the original version may be in one of the languages of the European Union.
2. The content of the production must be primarily set in Spain.
3. The content must have a direct relationship with artistic expressions such as literature, music, painting, architecture, sculpture, etc.
4. The script must be an adaptation of a previous literary work.
5. The production must have a biographical character or reflect historical events or characters, without prejudice to the adaptations made in the script.
6. The production includes narratives or events related to mythological characters that can be integrated into cultural traditions worldwide.
7. It helps improve understanding of cultural, social, religious, philosophical, or anthropological diversity.
8. The content of the work is related to and part of Spanish social, cultural, or political reality.
9. In the script, one or more protagonists or supporting characters are directly related to Spanish social, cultural, or political reality.
10. The audiovisual production is aimed at children or young audiences and contains values in line with the Education Law and related regulations.

This cultural certificate is issued automatically by Instituto de la Cinematografía y de las Artes Audiovisuales (the Institute of Cinematography and Audiovisual Arts), also known as ICAA, or a similar body of the competent Autonomous Community for projects benefiting from assistance, after being evaluated by Comisión de Ayudas a la Producción de Largometrajes y Cortometrajes (the Commission for Production Aid for Feature Films and Short Films). In the case of productions developed on a project basis, the ICAA will issue the certificate when at least two of the aforementioned requirements are met, upon application submitted to the Institute or similar organization of the Autonomous Community.

What tax deductions are available in Bizkaia for audiovisual productions?

The tax deduction applies to national and international feature films, short films, fiction series, animation, documentaries, and other productions in new digital formats, provided their cultural significance is proven. The deduction is based on the production costs, expenses incurred for obtaining copies, and producer or production company's advertising and promotion expenses.

The fiscal deduction for audiovisual productions in Bizkaia can range from 35% to 60% of the costs and investments generated in Bizkaia. It increases by 10% if the work is entirely filmed in Basque (Euskera), up to a maximum deduction of 70%.

The established deduction rates in the Foral Norm are as follows:

• 60% when the deduction base (production costs, obtaining copies, promotion, and advertising expenses generated in Bizkaia) where the taxpayer has their tax domicile exceeds 50% of the total expense amount.
• 50% if the Bizkaia expenses that make up the deduction base represent between 35% and 50% of the total expenses incurred in the territory.
• 40% when expenses range between 20% and 35%.
• For other cases, the deduction percentage is 35%.

In the case of shooting being entirely in Basque, the aforementioned percentages are increased by 10%.

In coproduction scenarios, deduction amounts are determined according to the respective percentages of each producer.

What conditions are established by the Foral Norm to apply for tax deductions?

The deduction amount, along with other grants received by the taxpayer for each audiovisual production, cannot exceed 50% of the total budget of the production, except in the case of international coproductions with individuals or companies from the European Union, where it cannot exceed 60% of the total budget. This limit does not apply to audiovisual productions considered "difficult," which includes short films, debut feature films, works with the complete original version in Basque, works with a budget below one million euros, and works with difficulties in market introduction due to their theme or inherent production factors. The taxpayer must provide evidence of the difficulty and request the qualification of a "difficult work" from the Tax Administration.

To apply for the deduction, it is necessary for the work to obtain the mentioned cultural certificate and for a new copy to be deposited in perfect condition at the Basque Film Library or in an authorized organization or institution capable of making it available to the public. This last requirement is not necessary if the deduction is claimed by the executive producer or if it is a work of Spanish nationality. 

Summary of Key Information on Tax Deductions for Audiovisual Productions in Bizkaia

Here is a concise and clear overview of the most relevant points regarding tax deductions in Bizkaia for audiovisual producers. These highlights will provide a precise understanding of the opportunities and benefits offered by Foral Norm 9/2022, as well as the conditions and requirements for applying for tax deductions.

• Foral Norm 9/2022 in Bizkaia updates and expands tax incentives for audiovisual production, including foreign productions and new digital formats.
• The goal is to compete with other regions by providing incentives of up to 70% of the project expenses.
• The focus is on attracting audiovisual productions to Bizkaia, particularly those produced in Basque.
• The regulation has the authorization of the European Commission, ensuring legal security.
• To qualify as a cultural work, the audiovisual production must meet at least two of the established requirements, such as a relationship with artistic expressions or the depiction of historical events.
• Tax deductions can range from 35% to 60% of the expenses and investments generated in Bizkaia, increasing by 10% for works filmed entirely in Basque, up to a maximum deduction of 70%.
• The deduction percentages vary based on the percentage of expenses generated in Bizkaia.
• In the case of coproductions, deduction amounts are determined according to each producer's respective percentages.
• There are deduction limits and exceptions for productions considered "difficult."
• Obtaining a cultural certificate and depositing a copy of the work in the Basque Film Library or an authorized organization are necessary requirements.

What services does "CAMALEÓN CINEMA SERVICES" offer to producers who want to learn about the tax deductions they are entitled to for their audiovisual production or who want to apply for a subsidy in Bizkaia?

At "CAMALEÓN CINEMA SERVICES," we provide the necessary advice to fully understand the requirements for applying for tax deductions applicable to audiovisual productions in Bizkaia, whether for projects in progress or completed. We have qualified personnel who can inform you about the requirements necessary to obtain the mentioned certificates, which are essential to be eligible for tax deductions, as well as assist you in the necessary procedures to obtain those certificates.

Additionally, we assist in obtaining the subsidies granted by the Basque Government for the realization of audiovisual productions. We assess whether the projects meet the expected budgets for each category, inform you about the deadlines and requirements of the latest published call for subsidies, manage the application for the available grants and subsidies for your audiovisual production, and help secure the necessary financing for each project.

Our comprehensive services aim to support producers in navigating the complex landscape of tax deductions and subsidies in Bizkaia, ensuring that you take full advantage of the available opportunities and receive the financial support you deserve for your audiovisual production.