B+ll : ae MEMORANDUM NOTE DE SERVICE, — |__| Seeiy Gnesizaton™ Cisiicaion de eecanie SY Jean-Frangois Bernier Director General, Cuitural industries c.c.: Ramzi Saad ‘Our Fite - Notre rélérence: Deputy Director General, Cultural Industries Johanne Mennie (300-+ Director, Canadian Audio-Visual Certification Office L _ c DW CH2015-02041 Beat White From Director, Film and Video Policy and Programs Date Pe NOV 19 2085 Le — a Subject International Cultural Test Comparison ‘Objet A research report on cultural tests used in 10 countries has been prepared by Film and Video Policy to support longer-term policy work, particularly related to the Canadian content test in the Canadian Film or Video Production Tax Credit (CPTC). It has been shared with the CRTC and others in relation to discussions on the “Let’s Talk TV” pilot projects and related research. A deck with an overview of the report and a copy of the report itself have been attached for your information, The deck will be presented at the annual meeting of federal, provincial and territorial directors responsible for culture and heritage on December 9, 2015 Details This is an internally conducted research project comparing the cultural tests used to assess the nationality of feature films in Canada, United Kingdom, Germany, Australia, New Zealand, France, Hungary, Ireland, Colombia and Mexico. These countries were chosen based on their use of financial incentives for feature films that are readily comparable to the CPTC. The scope of the research was limited (o the main financial incentive in each country for feature film. ‘The 55-page report summarizes the key findings of this comparison and analyses some of the potential policy implications for Canada, It also includes tables with the points systems and eligibility criteria of the 10 countries. Finally, country profiles describe the cultural test of each country in detail Sharing with others We felt the report would be useful for others that we knew were interested in the same subject, so we have shared it with the following organizations, in whole or in part o The CMPA, which is working with the Canada Media Fund, Telefilm Canada, and the Ontario: Media Development Corporation on a similar research study comparing the cultural certification practises in other countries. Although their report is different in scope and in the countries that Canada 2will be examined, some of the (ables included in our report have been shared as a starting point for the researchers. ions Branch. © CAVCO and Broadcasting and Digital Communi © The CRTC, in the context of conversations on the “Let’s Talk TV” pilot projects. Attachments, Prepared by: Owen Woodger, 819-997-4787International Cultural Test Comparison Owen Woodger Cultural Industries 819-997-4787 00041Working document ~ not for public distribution Table of Contents Key Findings Introduction... Analysis. Limitations. Cultural Test: Summary Table Eligibility Criteria Surnmary Table Country Profiles, Canada Country Profile United Kingdom (UK) Country Profile Germany Country Profile Australia Country Profile New Zealand (NZ) Country Profile France Country Profile Hungary Country Profile. Ireland Country Profile. Colombia Country Profile. Mexico Country Profile Cultural Test Comparison. Cultural Content Comparison Production Comparison Personnel Comparison International Cultural Test Comparison 1 15 20 20 22 26 31 33 236 40 43 45 47 48 50 52 54Working document — not for public distribution Key Findings © This report compares the cultural tests used to assess the nationality of feature films in Canada, the United Kingdom (UK), Germany, Australia, New Zealand, France, Hungary, Ireland, Colombia, and Mexico. The cultural tests were examined as they applied to the financial incentive in each country that is the most comparable to the Canadian Film and Video Production Tax Credit (CPTC). + Allof the sampled countries require feature films to meet a set of eligibility criteria to be certified as national content. Most combine this with a points system. © Generally points systems consider cultural content, production, and personnel. Most countries consider a mix of these elements. Canada only considers personnel in its points system but includes other factors in its eligibility criteria. ‘* Canada’s ten point system only evaluates the nationality of key creative personnel, ‘making it relatively simple and easy to comply with relative to the more complex and nuanced systems of countries like Germany. ‘©The sole focus on personnel in Canada’s points system is an example of their strong ‘emphasis on examining the process of how a film is made in order to evaluate its cultural significance, rather than evaluating the content of the film itself. Other countries include a focus on outcomes, or the cultural value of the content that is produced, often in combination with personnel ‘+ This focus on process rather than outcomes extends to the other parameters included in Canada’s eligibility criteria Introduction Many countries offer financial incentives to stimulate the economic and cultural benefits produced by their audiovisual industries. It is presumed that by offering these incentives more audiovisual productions will be made, creating the economic benefit of a more robust industry creating these productions. Additionally, more domestic productions create a larger role for national culture and voices in the domestic and international media. Therefore, domestic productions are often offered larger incentives than foreign productions because they are perceived to offer more cultural value to the taxpayer. To distinguish content with national cultural significance most countries employ some kind of cultural test. This report examines and compares different cultural tests used in audiovisual sectors across the world. To make these comparisons, this report examines the cultural test each country uses. Note, these cultural tests generally include both points systems and eligibility criteria. These will be considered separately for comparative purposes. Eligibility criteria are required rules that every production must meet in order to receive public funding. Points systems also establish certain requirements, but there is flexibility in which of these elements a production will fulfil in order to demonstrate its economic and cultural value. International Cultural Test Comparison 00043Working document ~ not for public distribution ‘The report begins by summarizing the key observations made by this study. This is followed by an analysis of these observations, and an acknowledgment of the limitations of this ‘comparison. The report then provides two summary tables comparing the points systems and eligibility criteria from each test. The report continues with country profiles, which examine the individual cultural tests in more detail, and concludes with a graphic comparison of how each ‘country weighs each of the three main cultural test criteria. Key Observations Seven out of the ten countries use a points system to administer their cultural test, requiring a production to receive a certain number of points to be certified as national content. The number of total points available varies from only 8 in Ireland to up to 100 in France. In general, these points systems require a production to obtain at least 50 to 60 percent of the available points to be certified. Australia does not use a points system, instead deciding to leave the certification of cultural content up to in-house evaluators at Screen Australia. Mexico and Colombia use a combination of eligibility criteria and evaluator judgement instead of a points system (see page 11) Most points systems measure three main criteria: cultural content (the cultural contribution of the film itself), production (the degree to which the film is nationally produced), and personnel (the number of key personnel who are of domestic nationality). Seven out of ten of the countries’ points systems consider all three of these criteria in some capacity, Canada’s points system considers only personnel, Ireland’s considers only cultural content, and Colombia considers only personnel and production. Across the ten countries no one factor stood out as the most important. Australia, the UK, Ireland, and Hungary put the most focus on cultural content. New Zealand, Mexico, and Germany put a similar weight on all three factors. Canada, France, and Colombia focused primarily on personnel (see page 48). The most commonly used cultural content criteria are: setting, characters, language, contribution to culture/history, and having content based in literary, artistic, or historic material (see page 50). The most commonly used production criteria are location of filming, location of audio post-production and editing, and location of visual post-production and editing (see page 52). The most commonly used personnel criteria are: director, producer, key production staff, scriptwriter, music composer, lead actors, majority of cast, majority of crew, director of photography, and editor (see page 54). All the criteria Canada uses are commonly used in other countries. The personnel criteria commonly used in other countries not considered directly in Canada’s cultural test are: producer, key production staff, and the majority of the cast and crew {although the producer is considered in Canada’s eligibility criteria) All the countries have additional eligibility criteria that set limits on what can be considered national cultural content. Eligibility criteria commonly considered in other countries but not evaluated by Canada included: setting maximums and minimums on budgets, International Cultural Test Comparison 00044Working document not for public distribution mandating language requirements, and mandating the experience of the producer. Eligibility criteria used in Canada that are not commonly used elsewhere include: mandating that the production company and key production staff must be nationals (only Canada and France do this), requiring a high percentage of the total and post-production budgets be spent nationally (only Canada and Hungary do this), and mandating that the production company maintain the worldwide copyright (only Canada does this). Some of Canada’s eligibility requirements can be considered production criteria, solely focusing on personnel criteria as done in the points system (see page 15). Some unique aspects of other countries’ cultural tests that might interest Canada could include ‘* Mandated training: Ireland requires that productions spend a certain amount of their budget on trainees ‘+ Flexible decisions: Australia allows evaluators complete flexibility in deciding what is considered cultural content. Other countries give evaluators the final say to override the points system or eligibility criteria. ‘© Graduated subsidy: France increases the rate of subsidy the higher a production scores on the cultural test. This could also be done using bonuses for specific factors, as practised in some Canadian provinces, + Above the line costs: Australia set limits on how much of the budget can be considered “above the line” costs? * Copyright in the points system: New Zealand integrates the ownership of the copyright by a New Zealand resident into their points system, making this condition favourable but not necessary. * Prestige exception: Hungary considers key personnel position to meet cultural requirements if tis filled by an EEA resident or by an individual who has won an international film festival award It will be important for Canada to consider the systems used in other countries moving forward. Canadian policy makers should understand what is common in cultural tests around the world and where Canada is an outlier in these trends. itis also important for Canada to understand the experience of other countries using unique policy ideas, as many of these could offer insightful solutions to problems also faced in Canada Analysis This section makes qualitative observations as to what trends existed across countries and how these trends contrast with the cultural test currently used in Canada. This may lead to interesting policy implications should Canada want to replicate some of the policies practised ‘Above the line costs include development costs before production starts, including on the story and script, and payment to the principal director, producers, and the principal cast. International Cultural Test ComparisonWorking document not for public distribution by other countries. See later country profiles for details on any of the eligibility criteria or points systems being discussed. Outcomes v. Process The area in which Canada appears to diverge the farthest from the norm is its focus on regulating the process of producing a film rather than regulating the content of a film itself. This, is true for both of the cultural and economic goals of the Canadian content system. In its pursuit of cultural goals, Canada maintains a distinct focus on a process rather than outcome based approach relative to the other countries being examined. The Canadian system focuses solely on ensuring the creators behind the production are Canadian. Not only do other countries have lower requirements relating to the number of key staff that must have their countries’ nationality, they also allow low scores in this category to be compensated by strong scores in cultural content and production. Additionally, Canada has a much higher threshold for ensuring the producers and key creative staff are Canadian than other countries. However, other countries have much higher standards relating to the content of a film than Canada. This involves evaluating how well the setting, characters, and underlying material contribute to the culture of the country. Indeed, this is about a third of what is considered in New Zealand and Germany, more than half of what is considered in the UK and Hungary, and all that is considered in Ireland, demonstrating a much larger focus on outcomes outside of Canada (see page 48) When trying to achieve cultural goals, focusing on outcomes rather than process has potential advantages and disadvantages. Traditional policy literature encourages focusing on outcomes, as this is the clearest way to connect policies to the mandate of government. For example, a film made entirely by Canadian producers and key creative staff could still be based on American source material, be set in the United States, and consist only of American characters. This would not necessarily be achieving the goals of producing distinctly Canadian cultural content. However, it is important to consider that an outcomes based approach necessitates that clearly defined goals are identified, which is not necessarily conducive to the artistic process involved in making a film. In this sense it may be better to regulate process rather than outcomes. Regulating process mandates who can be involved in a project, but does not interfere with the artistic process of those individuals in how they create content Additionally, it allows for the consideration of the broader goal of exhibiting a national perspective rather than explicit national themes of subjects. By regulating outcomes policy makers try to define and evaluate what can be considered a positive cultural contribution, and mandate that artists follow that definition. Defining culture in this way can be problematic, as it is not necessarily clear that having certain characters or storylines are more or less culturally valuable than others. Additionally, one might argue that Canada’s process based approach gives the additional benefit of increasing employment of Canadians in the creative sector. However, International Cultural Test ComparisonWorking document ~ not for public distribution Canada's points system assesses only 8 key positions, whereas other systems examine many more positions including the nationality of the cast and crew as a whole. Therefore, despite offering more flexibility in who occupies key creative positions, other systems are stricter in the number of employees in the production as a whole that must be national citizens. in this way, Canadian policy makers must decide if regulating the creator or the creation creates a final product that delivers more cultural benefit to Canadians Canada is also more focused on process relative to outcomes in how they pursue economic goals. in the case of the CPTC, Canada’s economic policies are found in the eligibility criteria. Canada mandates that the subsidized project is controlled by a Canadian corporation, who holds the copyright to the content, and that 75% of the services for the production are provided to or by Canadians. This contrasts Australia and New Zealand, who have less strict requirements relating to who the producer can be and what they can do, instead ensuring the project has @ minimum amount of qualifying expenditure to ensure a specific amount of economic activity is being added to the sector. Note that while Canada does have financial incentives like the Film and Video Production Services Tax Credit (PSTC) which focus on ensuring spending in Canada, so do countries like Australia and New Zealand. The distinction being made here is how different countries ensure their economic goals within the scope of their cultural tax credit. Just like with cultural goals, Canada mandates the process, that a certain share of the total budget is spent on Canadian goods and services, while other countries mandate the outcome, that there is a certain amount of spending on national goods and services. The advantages and disadvantages of an outcomes based approach for economic goals are similar to those for cultural goals. The advantage is a closer connection to the desired goal. If the only goal is increasing the spending in Canada’s film and video sector, an outcomes based approach seems the most evident way to accomplish this. This way certain projects that might bring large economic benefit to Canada’s audiovisual sector, but that do not meet all the individual requirements of copyright or percentage of spending are still allowed to proceed. However, the process based approach might be ideal if Canada has more complex economic goals. If Canada not only wants to achieve the economic goal of maximizing activity in the Canadian audiovisual sector, but also wants to achieve the cultural goal of Canadian content being produced and owned specifically by Canadians, than a process based approach might be ideal. In other words, having Canadians specifically conduct the majority of economic activities on a film might achieve additional cultural benefits as well as economic benefits. However, the fact the goal of these eligibility requirements is unclear indicates that it is a process based approach, as explicitly desired outcomes have not been identified. This contrasts the outcome based approach in Australia and New Zealand where the policy goals are much more evident Canada’s largest contrast to the other countries examined here is its focus on process rather than outcomes. Converging more with other countries may bring some advantages or disadvantages that must be weighed by policy makers. International Cultural Test Comparison 00047Working document ~ not for public distribution Flexibility/interpretation v. Exact/Defined Another contrast Canada draws to other countries is its focus on relatively exact/defined rules rather than flexible/interpreted rules. Different countries integrate flexibility into their cultural tests in different ways. One way is to allow more evaluator judgement in defining cultural content. Australia encapsulates this approach by examining each project on a case by case basis, leaving the interpretation of how much each production contributes to cultural goals up to Screen Australia’s evaluators rather than an established points system. New Zealand, Colombia, and Mexico also allow evaluators to have the final say on certification, although they have more defined rules than Australia. Finally, systems like the UK, Hungary, and Germany that assess the cultural content of a production allow for more of this type of flexibility, as even with robust definitions government employees must evaluate how much a project contributes “cultural and historical value”. Canada and France offer almost none of this type of flexibility, with each criteria being clearly defined by the rules rather than the evaluator. Another type of flexibility can come from the number of criteria that are being assessed. A points system with more criteria has inherently more flexibility, because if a production is lacking in one area, it can be made up for by other areas. This is encapsulated by the German system with 94 points and 39 different criteria. The least flexibility in this sense is offered by Colombia and Mexico, who each define cultural content using two or three criteria that are completely mandatory. Finally, flexibility can come from a flexible threshold. This may come from offering exceptions like the UK's Golden Points rule or it may come from altering the subsidy based on the cultural score of the production, like in France. Canada’s points system is on par with most countries in this respect by offering limited threshold flexibility by having minimum requirements for individual aspects of the points system. Both the flexible and the defined systems have advantages and disadvantages. More flexible systems allow for certain productions that might not otherwise qualify but are culturally valuable to get funding and prevent productions that meet the criteria but lack cultural value from getting funding. However, more flexible systems rely on the judgement of a number of individuals that may be susceptible to misjudgment, bias, or potentially regulatory capture by industry. More defined systems make the decision making process for the applicant easier as they are more predictable and transparent. Producers are able to easily understand the criteria they are required to meet and what they can expect if they do or do not meet the criteria. This is likely to make compliance easier and make government decisions easier to defend. However defined systems have the disadvantage of establishing one set definition of what is considered culturally valuable. This definition creates the problem of constraining the behaviour, choices, and creativity of content creators, which could potentially lessen the economic and cultural value of the content being created International Cultural Test ComparisonWorking document not for public distribution complexity v. Simplicity ‘Among the countries this report examines, there are two spectrums of complexity versus simplicity: within the delivery of the incentive and within the points system. The incentive itself might be complex, as is the case in Colombia where the financial incentives for films are announced and administered on an ad hoc basis. They may also be simpler as in New Zealand where it is simply 40% of Qualifying New Zealand Expenditure (see page 33). By integrating different eligibility criteria and changing the incentive based on budgets or revenue other countries fall somewhere in between. Canada’s incentive is relatively simple, made slightly more complicated only be their focus on labour expenditure and requirements for 75% of costs to be incurred domestically. There is also a spectrum of complexity relating to the points system. Germany's is the most complex with 94 points and 39 criteria where Mexico's is the most simple with only 3 criteria. Canada’s 10 point system is one of the most simple, with Ireland being the only country using fewer points. Additionally, the relative simplicity of Canada’s points system is further illustrated by the fact that they focus on the easy to understand criteria of personnel, rather than the more complex cultural content criteria. Again, both complexity and simplicity have advantages and disadvantages that must be weighed by Canadian policy makers. A more complex system allows for a greater ability to tie financial incentives directly to a larger number of policy goals. For example, the UK's Golden Points Rule allows them to tailor their cultural test so that it certifies more of the type of productions they want to support with their tax credit. However it also makes the system difficult to understand and unpredictable for producers. This is the advantage of a simpler system like Canada’s, which reduces the burden on filmmakers and regulators by making the application for financial incentives easier to understand, more predictable, and simpler to administer. Focus on Labour In Canada, both how the CPTC is applied and the eligibility requirements surrounding it focus strictly on the labour costs of the production. In contrast, all other countries examined in this report are concerned with production costs as a whole. Focusing on labour costs has the benefit of potentially encouraging relatively more employment in the audiovisual industry and being easier to verify for auditing purposes. However the all-spend option may be simpler for compliance and evaluation in other respects and might act as a larger incentive to attract audiovisual productions as it offers both more funding and flexibility. Limitations There are a number of caveats and limitations that must be noted here. Firstly, to limit the scope and complexity of the analysis this report identifies only one key financial incentive in each country, although many countries have multiple incentives available to feature films Secondly, the incentives are not necessarily perfectly comparable. Each incentive is a different size and delivered differently. For example, Canada’s incentive is a refundable tax credit based International Cultural Test Comparison10 Working document ~ not for public distribution ‘on labour costs while Germany's is a grant based on total production costs, and New Zealand’s isa tax rebate based on Qualifying New Zealand Expenditure. Additionally, each cultural test is examined only in how it applies to feature films. This ignores the fact that most of these same financial incentives are also applied to other formats (like documentaries or animation) and the cultural test may apply differently in these circumstances. For all these reasons one must be careful in how they draw conclusions about different cultural tests from these comparisons. For ‘example, while it may appear from the example below that New Zealand has a much higher threshold for qualifying cultural content than Germany, this is only the case for feature films. When the cultural tests are applied to animation their thresholds are very similar. Additionally, even when tests are applied to the same format and genre potential issues with comparison may arise. Since different point systems judge and administer things differently, certain thresholds might be easier to pass in some countries compared to others. For example, while Canada’s 60 percent threshold is higher than Germany's 51 percent threshold, the large number of categories in Germany's system make some criteria mutually exclusive. For example, while having a Canadian director does not exclude having a Canadian screenwriter, in Germany it would be difficult for the subject matter of a film to be simultaneously based on a historical figure or event, a German work of literature, an artist or art genre, and a religious or philosophical issue. International Cultural Test ComparisonWorking document - not for public distribution Cultural Test: Summary Table a [Country | Parad] “Sie of | Pointe ] Threshold’ | Cultural Tet of total points) important Notes | Economic | tncentive? | System | (Points Financial required for | | incentive? certification) |__ Personnel | Production | Cultural | Other tg RN Content Yes 6/10 10/10 5 ~~ [Incentive applies to only labour costs, (60x) | (400%) not all production costs. | | There are certain other minimums that | | must be met within the points system. | For example, either the director or fo | | screenwriter mustbe Canadian. __| 25% | Yes | 48/35 | 8/35 | 5/35 | 22/35 | - | -To ensure films meet a minimum (51%) | (23%) (14%) (63%) number of points in each category they | must adhere to the “Golden Points Rule” outline in the UK country profile below. European content and personnel are | on par with British counterparts while | a production must be in the UK. Germany — No. 20% | Yes 48/94 33/94 31/94 | 30/94 ~ | -In addition to the main threshold, there | | (51%) (35%) | (23%) | (325) are minimum requirements for cultural | content that must be met. - Personnel, production, and content from other European countries is, considered but not on par with German equivalents, * Refers to whether or not the country administers a separate but similar incentive available to feature films that is not subject to a cultural test, * Refers to the size ofthe incentive based on production casts, unless atherwise stated in the Important Notes section, International Cultural Test Comparison Version 5: 28/08/15 000081Working document ~ not for public distribution 2 Country | Parallel | Sizeof | Points | Threshold | Cultural Test (% of total points) Important Notes | Economic | Incentive? | System | (Points | Financial required for Incentive certification) Personnel | Production | Cultural | Other eae ee Content Ma Australia 40% No] Subjective | Yes Yes Yes | Yes | ~Screen Australia establishes personnel, judgement production, and cultural content as the of Screen main criteria for their decision. | Australia ~ However, they indicate that cultural (See country content will be of special importance. profile) | - They maintain the right to weigh any a - other factors they consider relevant. New Yes wom | Ves: 20782 | 13/32 | 6/32 Tin the other category, two points are Zealand | (62.5%) | (41%) | (19%) | (34%) | (6%)_| awarded for ownership of intellectual | | property and business development | | | outcomes. | France Yes 10-125% | Yes 25/100 | 60/100 | 20/100 | 20/100 | - | - Fundingis based on a sales tax applied (see to (60%) (20%) (20%) | to revenue, not production costs notes) 80/100 Therefore the initial rate of return is not (25-80%) 125% of sales, but 125% of the sales tax | {see notes) paid, = 125% rate applies only to the first £€3,075,000 (approximately $4.27 milion CAD) in ticket sales, with the rate decreasing after that. - 25/100 points is required to receive minimum funding, 80/100 points is necessary for full funding - Additionally, all productions must pass | ‘a separate “European scale” for direct, | funding. International Cultural Test Comparison Version 5: 28/08/15B Working document ~ not for public distribution Country | Parallel [Size of | Points | Threshold Cultural Test (6 of total points) Important Notes Economic Incentive? | System (Points Financial required for Incentive? | certification) Personnel | Production | Cultural | Other Content Hungary No 20% or | Yes 16/32 30/32 6/32 | 16/32 | - _ | - European personnel and some aspects 25% (50%) (31%) | (19%) | (50%) of cultural content are on par with their (see | | Hungarian counterparts. Production and notes) | other cultural content criteria are | | exclusively Hungarian - The incentive can be applied to the lesser of total expenditure (20%) or Hungarian expenditure (25%). Ireland No 32% Yes 3/8 - 8/8 = | -Ireland does not explicitly establish its (37.5%) (100%) cultural test as a points system However, the criteria have been interpreted by this report as a points system for comparative purposes. = With the exception of the Irish language, Ireland and the EEA are held on par with each other. Colombia Yes No Yes Yes No No | - Colombia's Ministry of Culture defines feature films as Colombian content on a legislative level such that it applies to all financial incentives available for feature films offered by Proimagenes Colombia and the Ministry of Culture. This is the definition used for this comparison. - This definition is based on a series of eligibility criteria rather than a points system, International Cultural Test Comparison Version 5: 28/08/15 000834 Working document ~ not for public distribution “Country | Parallel of | Points | Threshold | Economic Incentive? | System | Cultural Test (% of total points) Important Notes (Points Financial required for Incentive? certification) Personnel | Production | Cultural | Other 7 L. Mexico No No : Yes Yes nsiders three cultural eligibility requirements: ~The film must be judged by the | funding agency to have cultural | merit. 70% of production costs must be in Mexico | + 70% of personnel must be Mexican, International Cultural Test Comparison Version 5: 28/08/15 005415 Working document ~ not for public distribution Eligibility Criteria Summary Table Definitions Minimum. The lower budgetary bound for a production. Feature Film (Gen) - genre restrictions that must be met to define an audiovisual work as a feature film. Feature Film (Dis) - requirements as to how or when the film must be distributed to be defined as a feature film. Maximum- The upper limit a production cannot exceed, Min. % national spend- The minimum portion of the film’s budget that must be applied to spending within a nation’s economic sphere. National spend is defined differently by different countries. Other Legislation Addressed- additional legislation that will apply to feature films that is specifically addressed in the eligibility criteria. Note, all countries have other legislation applicable to feature films, this category notes when countries specifically highlight some other legislation as part of their eligibility criteria National Status of Applicant- how the nationality of an individual or company is established, Other Criteria for Applicant- any other eligibility criteria that must be met by the applicant in particular. Feature film (Con) - content restrictions that must be met to define an Other any other major eligibility criteria audiovisual work as a feature film, Language- language requirements that must be met by a feature film, Country [Maximum | | | Other criteria Feature film [Other | Language | Other | national for applicant legislation | _ spend applicant ee addressed | Con [Gen [bis | Canada| Tlgible labour | 75% of | ~ Prescribed | - Primary No | Yes | Yes No No |-Production | | | costs on which | budget and | taxable business must company must | taxcredit is | of post- | Canadian be producing | retain worldwide | calculated are | production. | corporation —_ | Canadian film | copyright | | capped at 60% with all key | and video, | ‘ownership for a | of total production | - Producer must | 25 year period. | expenditure related have full | (Te). personnel | control over | being project. | _ Canadian | _ * Nate: Acronyms are used to describe the eligible expenditure of each country, Refer to the country profiles forthe fll titles, International Cultural Test Comparison Version 5: 28/08/1516 Working document ~ not for public distribution Maximum — | Min. Other criteria | Feature film Other | Language Other national | statusof | for applicant legislation spend applicant addressed Con [Gen | Dis eee United £20 million TE 10% | ~Project must |-Musthave full | Yes | Yes | No | Meetlabour | No ‘No more than Kingdom (approximately be within the | control over policy 10% can be (UK) {aprx.) $38 UK project. requirements archived footage. | mition CAD), corporation | | taxnet. ee Germany | €1million | €4million (aprx. | 25% if TEis | -The “Must submita | Yes | Yes | Yes | Accessibility | One final TE.(aprx.1.4| $5.85 million | under€20 | applicant’s | previously legislation | version million CAD). | CAD), maximum | milion, | domicile or | commercially and other | must be in grant. 20%if over. | registered | released laws German office must be | feature length in Germany or | film asa | EEAwitha —_ | reference. | business | establishment | in Germany. | ‘Australia | $500,000 ~ Australian 5 Yes | Yes | No No No |=Nomore than QAPE (apne company or 20% on above the 475,000 Australian line costs. can) permanent residency and Business Number. —_ New $2.5 million | $15 or $50 a ~ Must be a NZ | - Applicant Yes | Yes | Yes No No =To have the Zealand | (apre.$2.2 | million (aprx. 13 resident for | must be credit continue to (nz) million CAD) | and $44 million taxation entirely apply up to $50 ‘anzPe. CAD) QNzPE. | purposes or be | responsible for million the carrying on —_| the project. production must business in NZ have an for taxation experienced i ee producer and International Cultural Test Comparison Version 5: 28/08/15Working document — not for public distribution v7 Country | Minimum® | Maximum | Miin.% | National | Othercriteria | Feature film ‘Other | Language ucner national | statusof | for applicant | legislation spend applicant addressed = oe Con [Gen | bis suificient market attachment, France | ~ 50% of total ‘| - Production | - Delegate Yes [Yes [No | Conformto | The |- The film mustbe production company must | company must social | subsidyis | filmed in co- costs. be established | be responsible | || tegistation | made — | operation with in France and_| for the ||| andrespect | available | film studios and | their financial, | | anobligation | tobe | post-production | | presidents, | technical and | tosocial | investedin | companies in directors, and artist, results protection. | future | France oran EEA | managers _| of the film. projects, | state musthave | - Delegate | These | French company must | projects | | nationality or | claim at least | must be | | be foreign 25% of the total | filmed in, nationals from | subsidy claimed | the same elsewhere in | by the | | language. | | the EFA production | | )oy od | |__| |_| | Hungary. 50% of total ‘80% ~ Applicant ~ Applicant Yes | Yes | Yes No No production must be a must be a | | costs Hungarian | producer or co- | | company ora. | producer | Hungarian | responsible for | | branch of an | the film. | L __ L EU company || ireland | €125,000 E16 | Tecappedat | = “Produceris | “Mustimake | Yes | Yes | Yes No Wo | Must provide | or €250,000 | €50 million. an trish film or | training to a | TE(aprx. _| Total aid capped resident or | television | | ‘minimum of 2 $173,300 _| at 50% of TE. operating. l | trainees per International Cultural Test Comparison Version 5: 28/08/15 00087Working document — not for public distribution 18 Country | Minimum? Feature film ‘Other “Other national | statusof | for applicant legislation spend applicant addressed Con [Gen | bis ‘and EIE cannot through a ~ Must have €350,000 of $346,490 | exceed 80% branch or been operating corporation tax AD) total production agency in for at least 12 credit claimed, up costs. Ireland months. | toa maximum of ~ Must have 8 trainees. | 100% | ‘ownership in - the company. - Colombia | Minimum | - Sieof | -Mustbe | - Primary Yes [ves [Yes | No | Mustbein | -513% of technical budget | capital produced by a | purpose of the Castilian or | personnel and requirement investment | business business must ina native | 70% of the artistic | judged by must be | whose bbe making | language | personnel must be | evaluators. Colombian. | national films. | of Colombian. | | capital | Colombia | subscribed unless and paid judged to exceeds 51%. be otherwise culturally a | relevant. - International Cultural Test Comparison Version 5: 28/08/15Country | Minimum | Maximum Min. % | National status | Other criteria for Feature film ‘Other Language ‘Other ational | of applicant applicant legislation spend addressed : | —__ [cen Ten eee Mexico Maximum | More than |-Claimant must | ~The investment |No | No No No Deduction claim is20 | 70%of —_| payincome tax_ | must be given to cannot exceed million pesos | production | in Mexico. the company 10% of income tax (aprx.$1.6 | costs must responsible for or 80% of the cost million CAD) | be carried the film. of the film, for production | out in Total incentive CAD) for distribution, and $2 milion | Mexican (aprx. 160,000 | territory. International Cultural Test Comparison available for all productions 650 milion pesos. 70% of distribution, technical and creative staff must be Mexican. Version 5: 28/08/1520 Working document — not for public distribution Country Profiles Canada Country Profile This profile examines Canada’s Canadian Content Test as it applies to the Canadian Film or Video Production Tax Credit available for feature films, More detail about both the test and tax credit are available here. Canadian Film or Video Production Tax Credit (CPTC) Made available for Canadian film or video productions, the CPTC is a refundable tax credit of 25 percent of a production’s labour expenditure, and is administered by the Canadian Audio-Visual Certification Office (CAVCO) and the Canada Revenue Agency (CRA). The labour costs may not exceed 60 percent of total qualifying expenditure and the project must be produced by a prescribed taxable Canadian corporation whose primary business is producing Canadian film and video. The producer must retain worldwide copyright ownership for the 25 year period beginning at the time the production becomes commercially exploitable. Additionally, all key producer personnel must be Canadian, and the company must demonstrate these key personnel maintained full responsibility and control over the project. In addition, at least 75 percent of prescribed costs incurred during the production phase must be for services provided to or by Canadians and at least 75 percent of post-production must be provided in Canada. To qualify for the CPTC the project must not fall under an ineligible genre of production (ie. talk show, advertising) and be confirmed by a Canadian distributor or CRTC licensed broadcaster that it will be released within two years of its completion Test of Cultural Characteristics To be certified for the CPTC a feature film must receive 6 out of the 10 potential points outlined in the table below. Additionally, either the director or the screenwriter must be Canadian, and either the lead performer or the second lead performer must be Canadian. While the points system is summarized in the table below, more extensive definitions of each criteria is provided in the link above. International Cultural Test Comparison Version 5: 28/08/15Working document ~ not for public distribution Canadian Content Points System ar Position | Director Screenwriter [Lead Performer Second Lead Performer ‘Art Director | Music Composer [Director of Photography [Picture Editor CAN: Personnel sores Breakdown Scriptwriter n Music Compose me Second Lead Actor mart Director director of Photography Picture Eeitor International Cultural Test Comparison Version 5: 28/08/15 000642 Working document ~ not for public distribution United Kingdom (UK) Country Profile This profile examines the UK cultural test as it applies to the UK Film Tax Relief. Find a more complete description of the available tax relief and cultural test here UK Film Tox Relief (UKFTR) Administered by the British Film Institute, the UKFTR is a credit of 25 percent on the lesser of total UK qualifying film production expenditure’ (UKQPE) or 80% of total expenditure, on films with a total expenditure of £20 million (approximately 38 million CAD) or less. Films with higher budgets receive a rebate of 20 percent after the first £20 million. A minimum of 10 percent of the overall budget must be spent in the UK. The UKFTR is available to film production companies that are principally responsible for the project and within the UK corporation tax net, which applies to UK corporate entities and foreign corporate entities trading in the UK. At any point before or during the project production companies can claim interim certification of their eligibility for the UKQPE, allowing them to be confident in their eligibility. No more than 10 percent of the film can be archived footage. Eligibility is restricted to certain format and labour policy requirements in defining a “feature film for theatrical release” established in the Films Act 1985. Cultural Test for Film For a film to be eligible for the UKFTR it must pass the points test outlined below. In general, ifa film achieves 18 of the 35 possible points (51%) they will be certified. However, if the film scores 19 points in sections A4, C, and D relating to language, production location, and personnel they are also subject to the additional requirements of the Golden Points Rule. This is to ensure a film is not certified solely on these three criteria and meets certain minimum cultural content standards, Both this rule and the points system are summarized in a table and chart below. When requesting certification the applicant is to apply for the specific points they believe their project has earned, and need not apply for more points than are required to pass the cultural test. More detailed explanations of the specific aspects of the cultural test and the Golden Points Rule can be found here. lany countries distinguish total expenditure from qualifying expenditure to describe financial activity that provides direct economic benefit to the country in question. Each country defines the term differently, and more robust definitions for each country can be found in the provided links. International Cultural Test Comparison Version 5: 28/08/15 00082Working document ~ not for public distribution UK Cultural Test B Criteria Points Cultural Criteria - 18 im set in the UK or EEA a Lead characters British or EEA citizens or residents Film based on British or EEA subject matter or underlying material Original dialogue recorded mainly in English or UK indigenous language or EEA language | 6 Cultural Contribution 2 The film demonstrates British creativity, British heritage, and/or diversity 4 Cultural Hubs {5 | ‘Maximum of 4 points from the criteria listed below | = At least 50% of the principal photography or SFX takes place in the UK. 2 | = At least 50% of the VFX takes place in the UK 2 i ‘An extra 2 points can be awarded if at least 80% of principal photography or | 2 VEX or SFX takes place in the UK Music recording/audio post production/picture post production a _ Cultural Practitioners (UK or EEA citizens or residents) D Director - 1 Scriptwriter - 1 Producer — z Composer 1 Lead Actors 1 Majority of Cast — 1 Key Staff (lead cinematographer, lead production designer, lead costume 1 designer, lead editor, lead sound designer, lead visual effects supervisor, lead | hair and makeup supervisor) Majority of Crew - _ 1 International Cultural Test Comparison Version 5: 28/08/15 0006324 Working document ~ not for public distribution UK Golden Points Rule _— Have you scored 18 points in sections AF (6), C5} 8 D BP ———___ us have fallen into the Have you sevred 2 oF more poi Al andar A2? 1 / ot 5 {vou posse | eve you scone 4 pints in | Sultiral Test £ You p: You fail the Gator Test X J Nee International Cultural Test Comparison Version 5: 28/08/15Working document ~ not for public distribution UK: Weight of Cultural Test Personnel Production Cultural Content UK: Cultural Content Breakdown 25 UK: Production Breakdown ‘Atleast 50% of principal photography ar special effec the UK At least 50% of visual effects in the UK ‘Audio/pleture post production UK: Personnel Breakdown setting lead Characters Creative Materia! Conteibution to UK Culture/History m Language International Cultural Test Comparison Director Scriptwriter mead Actors ‘Key Production Stat Producer 1 Music Composer = Majority of cast majority of Crew Version 5: 28/08/1526 Working document ~ not for public distribution Germany Country Profile This profile examines Germany's Test of Cultural Characteristics as it applies to the German Federal Film Fund available for feature films. Find a more complete description of the available fund and test here German Federal Film Fund (OFFF) ‘The DFFF is a grant of up to 20 percent of the approved production costs of a feature film administered by the German Federal Film Board (FFA). The applicant's domicile or registered office must be in Germany, or in another EEA contracting state with a business establishment in Germany. To apply the producer must have produced at least one feature length film commercially released in Germany in the last 5 years, and submit it as a reference. To be defined as a feature film audiovisual content is subject to certain length, distribution, and format requirements. The film must have minimum production costs of €1 million (approximately $1.4 million CAD), and the grant itself cannot exceed €4 million (approximately $5.55 million CAD). To be eligible for the grant, one final version of the film must be in the German language, with exceptions for certain dialogue scenes. The film must comply with other German laws and accessibility accommodations (including a creating a version of the film with German subtitles). The applicant must make 2 minimum contribution of 5 percent of the total production costs to the project. At least 25 percent of the total production costs must be incurred in Germany for budgets under €20 million (approximately $27.75 million CAD) or 20 percent for budgets over €20 million. Additionally, the film must meet the Test of Cultural Characteristics, outlined below. Test of Cultural Characteristics To be certified for the DFFF a feature film must receive 48 out of the 94 potential points outlined in the table below. The film must also meet at least four criteria in the “Cultural Content” category to be certified. More detailed notes on each criteria can be found in “Annexe 2" here. German Test of Cultural Characteristics Criteria Points CulturalContent _ 30 Film (substance/underlying material) plays mainly in Germany or in the German cultural | 2 Uses German landmarks (ie. motives that can be attributed to Germany, such as “Black | 3 Forest Cottage”) Uses German locations — 3 ‘Main character(s) of the underlying material is/was German 2 Storyline/underlying material is German 2 Storyline/underlying material is based on literary material 2 Storyline/underlying material deals with artists or art genre i i International Cultural Test Comparison Version 5: 28/08/15Working document — not for public distribution (eg. composition, dance, performance art, painting, architecture, pop art, comic) ‘A contemporary artist from areas other than film art takes a 2 | | substantial part in the film Storyline/underlying material refers to a personality of 2 contemporary or world history (e.g. Gandhi) or a fictional character in cultural history (e.g. Hercules, Siegfried, Hansel & Gretel) _ Storyline/underlying material refers to a historical event in 2 \ world history or a similar fictional event (e.g. the conquest of Troy) | Storyline/underlying material deals with issues of religious or 2 philosophical beliefs or issues of current social or cultural relevance (e.g,, Islamic headscarf; refugee problem, etc.) A final version in the German language 3 Film plays mainly in another EEA state — i Film uses other European landmarks (if there are no German 1 landmarks or locations) or further European landmarks (if there | | are German landmarks or locations as well) _ ‘Main character of the underlying material from another/further 1 EEA state . | Creative Talents Film artists of international standing from Germany in an important role - "German stars" (meaning the below-listed persons who have participated in a film, attended a festival according to 22 (3) the Act on Film Promotion (FFG) or won a prize according to 22 (3) FFG) { Film artists of international standing from another/further EEA 2 state in an important role ~ "European stars" (meaning the | below-listed persons who have participated in a film, attended | a festival according to 22 (3) FFG or won a prize according to 22 (3) FFG) ‘Actors from Germany or the EEA (unless already covered under the "stars" definition) (max. 3 points) Ist principal actor (1 point) or 2nd principal actor (1 point) or two supporting actors (1 point) Director _ Scriptwriter Producer/Co: Composer Director of Photography Editor 2 ‘Costume Designer/Lead Animation Artist [a Make-up Artist/Lead FX Artist International Cultural Test Comparison Version 5: 28/08/15, 00087Working document ~ not for public distribution 28 ‘Sound Recordist/Sound Designer - - _ Production Designer/Environment/Digital Matte Painting Artist — ‘Art Director/Lead Shading/Texturing Artist. Lead Compositing Artist Line Producer VEX Supervisor _ _ Post-production Supervisor Production Location shooting or studio shooting in Germany (12 points if at least 50% of | 12 shooting (= studio and location) and at least 70% of studio shooting, if any, ‘spent in Germany) (6 points if at least 25% of shooting (= studio and location) | and at least 70% of studio shooting, if any, spent in Germany) If live-action shooting takes place in Germany which can accumulate points for | 8 location or studio shooting in Germany under the conditions listed above, the following provision applies: ‘At least 25% of digital effects (VFX) in Germany, based on the overall cost of the measure): 1 point max. 4 Ifo live-action shooting takes place in Germany, or if live-action shooting cannot accumulate points for location or studio shooting in Germany under the conditions listed above and the VFX budget spent in Germany amounts to at least EUR 5 million and includes at least 25% of the total VFX budget: At least 25% of special effects (SFX) in Germany, based on the overall cost of the measure: 1 point max. 4 | 100% of music recordings in German) _ 2 100% of sound editing and mixing in Germany 2 100% of laboratory work up to first release print in Germany 1 100% of post-production in Germany accompanying the shoot 3 in Germany 100% of final editing (incl. digital intermediate) in Germany iE} International Cultural Test Comparison Version 5: 28/08/15~ Working document — not for public distribution GER: Weight of Cultural GER: Production Test Breakdown Location or studio shooting in Germany Visual effects in Germany Music recording in Germany Sound editing and mixing in Germany Laboratory work in Germany Personnel # Production Cultural Content is costeror tion in Gormiaa 1 Final eating in Germany 1 Underying material occurs in Germany GER: Cultural Content Breakdown "8 German Landmarks German Locations ‘Main Character is/was German ‘e Underiying story German # Underlying story based on literary material 1 Underying story deals with arts or art genre A contemporary non-film artist takes a part inthe film sn Uneriying personality of contemporary, cultural, world history ‘erlving event fram contemporary, cultural o world history 1 Underiving materia tackles religious or Socal belts ‘Final version in the German language Underlying material in another EEA, Main character rom anther EEA state Fim uses other European landmarks International Cultural Test Comparison Version 5: 28/08/15Working document ~ not for public distribution GER: Personnel Breakdown International Cultural Test Comparison 30 © vector w Producer Scriptwriter ve Music Composer wm tead Actors Director of Photography Editor ‘Costume Designer mnvake up artist Sound Designer ‘Production Designer Art Director 18 Lead Compositing Artis Une Producer VEX Supervise Post Production Supervisor Version 5: 28/08/15 0007031 Working document ~ not for public distribution Australia Country Profile This profile examines Australia’s Significant Australian Content Test as it applies to the producer offset available for feature films, More details about both the test and rebate are available here. The Producer Offset Administered by Screen Australia, the Producer Offset is a 40 percent tax rebate available for feature films. Screen Australia is a federally funded corporate body established by the 2008 Screen Australia Act with the purpose of promoting and supporting the development of the screen-based production industry. Screen Australia is governed by a 9 person board and is granted a significant amount of independent decision making power, although their funding still relies on the annual budget of the Australian government. The film must have a minimum, of $500,000 (approximately $475,000 CAD) in qualifying Australian production expenditure (QAPE), and spend no more than 20 percent on ‘above the line’ costs. The applicant must be an Australian company or a foreign company with an Australian permanent residency and. Australian Business Number. To be defined as a feature film the content must meet certain format and genre requirements and be verified for Australian distribution in some form. The film can only be certified after it is completed, although the applicant may apply for provisional certification at any point before or during the project. Note, taking advantage of a number of other incentives offered by the Australian government may preclude eligibility to the producer offset. Significant Australian Content (SAC) Test Unlike other countries Australia does not assess the cultural relevance of a film using a points system, Similarly to a points system, Screen Australia makes the criteria it bases its decisions on publically available. However, unlike a points system each criteria does not have a set weight, and Screen Australia is able to consider or not consider any criteria it feels to be relevant or not relevant. Their listed criteria are made available in the table below. While the source of finance and the holder of the copyright of the film were previously required to be Australian, they are now considered and weighed as Screen Australia considers relevant. More information and detail on the criteria and test are available here. International Cultural Test Comparison Version 5: 28/08/15 00007432 Working document ~ not for public distribution SAC Test | Criteri [Subject matter of the film. The place where the film was made. The nationalities and places of residence of the persons taking part in the making of the film {including producers, directors, authors, scriptwriters, composers, actors, editors, directors of photography, production designers, and other film technicians). The details of production expenditure incurred in respect of the film ‘Any other matters that Screen Australia considers to be relevant. International Cultural Test Comparison Version 5: 28/08/15 0007233 Working document ~ not for public distribution New Zealand (NZ) Country Profile This profile examines the “significant New Zealand content” test as it applies to the New Zealand Screen Production Grant. Find a complete outline of the grant and accompanying, requirements here under “Related information, NZSPG Criteria- New Zealand Productions”. ‘New Zealand Screen Production Grant (NZSPG) Available for feature films, the NZSPG is a 40 percent tax rebate on a film’s Qualifying New Zealand Production Expenditure (QNZPE) administered by the New Zealand Film Commission (NZFC). The content must meet certain length, distribution, format, and genre requirements to be defined as a feature film. The applicant must be the entity responsible for carrying out, or making arrangements for carrying out, the production of the project. Only one entity per production is eligible for the NZSPG. To qualify, the budget of the project must have qualifying expenditures between $2.5 and $15 million (approximately $2.2 and $13 million CAD). Budgets between $15 million and $50 million (approximately $13 and $44 million CAD) may be eligible for the 40 percent rebate to be extended as an equity investment if they meet certain criteria relating to producer experience and have at least a 10% market attachment. Producer experience refers to having at least one feature film released theatrically in NZ or internationally. Market attachment refers to financing where the financier is not entitled to share in the net receipts of the production like international sales advances, distribution advances, and license fees. The applicant must be a company that is a New Zealand resident for taxation purposes or is carrying on business in New Zealand through a fixed establishment, or if a tax treaty applies, through a permanent establishment. Additionally, the project must pass the “Significant New Zealand Content” test outlined below. To ensure they meet all of these criteria before beginning the project, applicants may apply for provisional certifications of eligibility that indicates the extent to which their project will be likely to meet the eligibility criteria outlined above when it is completed. Significant New Zealand Content To be eligible a production must be judged by the NZFC to have significant New Zealand content. In general terms, this decision is made on the points system outlined below. However, these are not fixed policy rules and the NZFC will exercise their discretion in making their decision. Generally productions will be expected to earn 20 out of 32 points with at least 3 points in NZ subject matter and 3 points from sections C1-C3 for director, producer, and scriptwriter. While the points system is summarized in the table below, a more extensive outline of how points are awarded for each criteria is provided in the link provided above. International Cultural Test Comparison Version 5: 28/08/15 00073Working document ~ not for public distribution Significant New Zealand Content Test 34 Criteria New Zealand Subject Matter Setting Lead Characters Creative Material Contribution to New Zealand Culture/History New Zealand Production Activity ‘Shooting- Location/Studio (50% for 1, 75% for 2) Visual Post-Production, Digital or Visual Effects (50% for 1, 75% for 2) Music Recording, Voice Recording, Audio Post-Production if Applicable, Concept Design & Physical Effects (Period/Genre) or Research & Development (documentaries) (50% plus) New Zealand Personnel Director (2 points if the director is qualifying or where there are multiple directors, 1 point if more than 33% and 2 points if more than 66%) Producer (2 points if at least one of the producers is qualifying or if there are more than three, one of the three lead producers is qualifying) Scriptwriter (2 points if the writer is qualifying or where there are multiple writers, 1 point if more than 33% and 2 points when more than 66%) ‘Music Composer/Source Music (1 point if the composer is qualifying or if more than 50% of the source music is by qualifying persons) ts if 2 of the Lead Actors (1 point if one of the lead actors is qualifying, 2p lead actors are qualifying) _ Majority of Cast (50% plus) Key Production staff (1 point if 2 of the key production staff are qualifying, 2 points if 3 of the key production staff are qualifying) Drama: lead cinematographer, lead production designer or art director, lead editor, lead digital/special effects supervisor) Majority of Crew (50% plus) New Zealand Business Ownership of intellectual Property Business development outcomes including copyright of applicant company, rights of recoupment, sources of financing International Cultural Test Comparison Version 5: 28/08/15 00074