Newsletter, June 2021
The country has introduced a film industry program which includes a package of financial incentives to international producers and film studios to use the beautiful island of Cyprus for their production. The financial incentives mean a lot for production companies, but the beauties of the island will steal any director’s heart.
Cyprus is the third largest island in the Mediterranean Sea, located at the Eastern end of Europe, at the crux of the busy shipping and air routes linking three continents, Europe, Africa and Asia, and in close proximity to diversified civilizations. Cyprus, through a rich and fascinating history, going back more than 10,000 years, has developed from a Stone Age settlement to a modern and thriving European Union state, harmoniously blending influences from different civilizations. Due to its position, the island has always been a strategic spot for empires and conquerors. Persians, Franks, Ottomans and lately English have conquered the grounds of Cyprus who are considered sacred and holy. Every conqueror has left his mark in the island, thus making it so unique and full of new discoveries.
Apart from the natural beauty aspect, Cyprus also represents an attractive investment for any producer looking for a filming destination that also has the right formula of incentives in place.
Specifically, production companies that opt to film in Cyprus will be able to choose between cash rebate or tax credit and can also benefit from tax discounts on investments made on equipment and infrastructure, as well as VAT returns on expenditure in scope.
In addition, and in conjunction with the above, Cyprus offers a variety of pre-existing tax incentives for corporations and individuals as well as an attractive IP regime, creating a very attractive playground for film professionals.
a. Cash rebate
b. Tax credit
c. Tax discount for investment in infrastructure and equipment
d. VAT Refund on qualifying production expenditure
a. Cash Rebate
- Rebate of up to 35% of eligible expenditures incurred in Cyprus will be granted, where the amount will depend on the score of the production at the “cultural test” (this test considers certain criteria like the participation of local actors, the use of the Greek language and highlighting Cypriot culture in the production).
- The rebate will be given once filming is completed, on receipt of the audit report and its review by the committee.
- The maximum amount that can be given for each production is €650.000 in 12 consecutive months and the annual available amount for all productions shall not exceed €1.500.000 in total per year.
It is important to highlight that any company claiming the cash rebate incentive cannot also claim the income tax exemption.
b. Tax Credit
- As an alternative to cash rebate, tax credit, offers a reduction of the tax liability of the person responsible for the implementation of a production, with the same criteria that apply for cash rebate (with the exception of the €650.000 limit).
- The sum of the tax credit against the taxable income shall not exceed 50% of the Applicants’ taxable income for the tax year within which the production is made.
- The tax credit, to the extent that it is not granted due to the above percentage restriction, shall be carried forward and be given within the next five years, subject to the above percentage restriction.
c. Tax discount for investment in infrastructure and equipment
- Any small and medium-sized enterprise or a physical person subject to a tax liability in Cyprus investing in cinematographic infrastructure and technological equipment will be entitled to deduct the amount of its investment from its taxable income.
- The aid may not exceed 20% of the qualifying production expenditures in the case of small enterprises and physical persons and 10% of the qualifying production expenditures in the case of medium-sized enterprises.
- Investment in the case of equipment should remain in the territory of Cyprus for a period of at least 5 years.
d. VAT Refund on qualifying production expenditures
- For qualifying production expenditures incurred in Cyprus by natural or legal persons from third countries and which are related to the implementation of productions, the company is entitled to a refund of VAT.
- Value Added Tax rates in the Republic of Cyprus are 19%, 9% and 5% on all products and services provided in the Republic of Cyprus and 19% and 5%, on all taxable imports.
- VAT returns arise within 6 months with respect to the person who carries out the foreign filming in Cyprus from the end of the last deadline for submitting the VAT declaration for the specific VAT period during which the expense occurred or from the date on which the application for VAT return is filed.
Qualified production categories can include:
A. Feature films (including animations) – Long Films
B. Television film or television series or mini-series
- Television Film
- Television Series or mini-series
- Creative documentary
- Digital or analogue animation
- Transmedia and Cross media productions
- Reality programs which directly or indirectly promote the Republic of Cyprus and its culture.
The Mediterranean landscape and the amazing weather make the country a great production destination. The island combines great natural beauties of the sea and mountains, and its characteristics are purely Mediterranean. The sea shores look very similar to a traditional Greek island, while at the same time, pine and cedar scenery along with the small villages give the essence of an Italian landscape. The scenery unfolds across deep blue seas and sandy beaches, captivating forests, breath-taking mountains, rugged headlands, picturesque villages, and modern cities, thus combining in the most authentic way the pure essence of nature with an urban landscape.
From the warm shores of the mainland to the unspoiled and cool oasis of the Troodos Mountain range, you will be able to discover the island’s green side full of local herbs and endemic plants – including Cyprus orchid, tulip and crocus – rare plants that peep out amidst waterfalls and winding trails, while exotic and rare forms of wildlife will compose a unique scenery. Cyprus constitutes a birdwatcher’s dream, with flocks of flamingos frequenting the salt lakes, and many other significant species passing through or nesting. Green and Loggerhead turtles breed on the island’s sandy beaches in summer, while the Mediterranean Seal and dolphins have also been seen swimming in the warm, calm, crystal clear seas of the island.
The rich historical and cultural landscape, reinforced with an inspiring architecture, is reflected in the hundreds of archaeological sites scattered throughout the country, representing various historical periods in the island’s evolution. The island is an open-air museum of prehistoric settlements, classical Greek temples, Roman theatres and villas, Early Christian basilicas, Byzantine churches and monasteries, Crusader castles, Gothic cathedrals, Venetian fortifications, Moslem mosques, and British colonial-style buildings.
UNESCO includes a number of Cyprus’ sights on its list of World Heritage Sites, which is by no means surprising, given the fact that the old ways of life, customs and traditions are still beautifully preserved in the rural villages of the island.
In Cyprus, the sun shines virtually almost every single day. Blessed with the beauty of the Mediterranean climate, with year-round sunshine, Cyprus has one of the best climates worldwide offering clear distinctions between the four seasons.
Finally, Cyprus constitutes a small island with short internal distances from one city to the other or from the coast to the mountains (in just a 40-minute drive), while no city lies more than 100km from any of the two international airports.
Cosmopolitan, buzzing and culturally rich, Cyprus offers a variety of lifestyle options in a beautiful, safe environment, providing the perfect combination between business and pleasure.
To conclude, Cyprus’ competitive advantages are significantly enriched by a robust and transparent legal and regulatory framework and an attractive tax regime, which offers a wide range of incentives and advantages both for legal and natural persons.
As a dynamic business center, Cyprus offers an abundance of highly educated and skilled individuals, multilingual in their majority – with the English language being widely spoken amongst Cypriots – ready to serve the needs of any business. Thus, anyone who decides to visit Cyprus either for business or pleasure does not need to worry about difficulties in communication.