Film Financing on a Global Scale: Bridging Regions Through Incentives

Discussion with Gonzalo Carrion

Gonzalo Carrion’s career bridges the worlds of creativity and strategic business leadership. Beginning as a fine arts student focused on sculpture, he transitioned into the visual effects (VFX) industry, gaining early experience as a production assistant and 3D artist. As Managing Director of EL Ranchito, Carrion oversaw acclaimed projects such as “Game of Thrones”. Under his leadership, the company doubled in size and profitability, culminating in its acquisition by a venture capital firm. Now an independent consultant, Carrion leverages his expertise in tax credits and rebates to illuminate their pivotal role in filmmaking, regional competitiveness, and Spain’s growing influence in the industry. 

Global Trends in Film Industry Tax Incentives

Tax incentives have become indispensable in the film industry, offering governments a proven method to attract productions and bolster local economies. Over the last 15 years, the introduction of initiatives such as Canada’s groundbreaking tax credit program has set a global standard. Today, more than 100 countries employ similar schemes, collectively fueling a VFX sector that has grown by 5-7% annually over the past decade.

Carrion highlights how this growth was particularly pronounced during the COVID-19 pandemic: “Governments supporting tax incentives have driven exponential growth in visual effects. In 2022, the industry’s value reached approximately $11.5 billion, and it’s set to grow by 12% over the next five years”.

Yet challenges persist. For example, the U.S. writer’s strike in 2023 temporarily slowed industry momentum, illustrating how external factors can impact the delicate balance of production pipelines. Despite such setbacks, tax incentives remain a key driver of resilience, enabling countries to attract investment and spur innovation within the sector.

The Decision-Making Power of Tax Rebates

Tax rebates are not merely a bonus; they are a critical factor influencing where productions are executed. Carrion recounts a missed opportunity involving one of the world's top Tier One award-winning TV series, where Spain’s favorable tax schemes were overshadowed by a misunderstanding of rebate timelines. Producers ultimately moved the work to Canada and the UK, where financial support seemed more immediately accessible. “Even with attractive rebates, timing and clarity are critical”, Carrion explains. “A lack of information or delays can divert millions of dollars to other regions”.

The size of a rebate is only one piece of the puzzle. Speed of fund accessibility, quality of infrastructure, and workforce availability are equally important. For example, high-budget productions often require seamless coordination between pre- and post-production phases, making reliability and efficiency crucial considerations. By addressing these factors, regions can position themselves as premier destinations for large-scale projects.

Regional Competitiveness: What Sets Europe Apart

Europe’s multifaceted tax incentive landscape makes it an attractive option for filmmakers. Countries like Spain, Portugal, France, and Ireland offer programs that can be combined across borders, enabling productions to maximize financial benefits while leveraging the continent’s vast resources. “Europe is a patchwork of opportunities”, Carrion observes. “For instance, France and Belgium’s shared schemes allow productions to benefit from both nations, creating a unique competitive edge”.

Infrastructure and talent hubs further enhance Europe’s appeal. The UK, with its long-established rebate programs, continues to draw significant productions. Meanwhile, emerging markets like India and Mexico are redefining the competitive landscape by offering cost-effective solutions. India, in particular, is transitioning from an outsourcing hub to a full-fledged production powerhouse, signaling its potential to rival traditional markets in the coming years.

However, Europe’s strength lies in its diversity. Carrion highlights this by saying, “I think that the diversity that we have in Europe, you don't have elsewhere”. This interconnectedness allows filmmakers to strategically plan their projects, combining multiple incentive programs across countries to achieve both financial and creative goals, something no other region offers. This strategic advantage enables productions to maximize benefits while maintaining high production standards.

Spain: A Rising Star in Tax Incentives

Spain has become a standout player in Europe’s tax incentive landscape, offering robust national and regional programs. At the national level, productions benefit from a 30% rebate on the first EU €1 million of eligible costs and 25% on additional expenditures. For VFX-specific projects, there is no minimum expenditure requirement, though a cap of EU €300,000 over three years applies.

Regional incentives amplify these benefits. “In the Canary Islands, rebates reach 50%, while the Basque Country offers up to 60%”, Carrion notes. “These figures translate into substantial savings, making Spain an attractive destination for international productions”.

Collaboration with Spanish entities is essential, as only local production companies can file for rebates. Carrion advises working with experts or organizations like ICEX, Invest in Spain to navigate the system effectively. Spain’s appeal is further strengthened by significant investments from major players like Netflix, which operates its largest European production hub in Madrid, and Skydance Animation, which continues to expand its presence in the country.

Key Takeaways

Tax incentives are a cornerstone of the film industry’s growth and innovation, providing a strategic advantage for regions competing to attract major productions. Gonzalo Carrion underscores their importance, offering three critical insights for executives looking to navigate this complex landscape:

Strategic Planning is Essential: Leveraging tax incentives effectively requires an in-depth understanding of eligibility criteria, regional differences, and rebate timelines. This level of planning ensures projects can capitalize on the financial benefits without delays or complications.

Europe’s Unique Value Proposition: With its interconnected schemes and diverse offerings, Europe provides unparalleled opportunities for international filmmakers. By blending financial incentives with creative flexibility, the continent remains a top destination for ambitious projects.

Spain’s Growing Prominence: Spain is quickly becoming a global leader in tax incentives. Its robust programs, coupled with advanced infrastructure, highly specialized technicians and significant foreign investments, make it a premier location for both filmmakers and investors seeking high returnsThe Spanish audiovisual sector is on the brink of unprecedented growth”, Carrion emphasizes. For executives aiming to lead in this space, leveraging tax incentives will be the key to unlocking new possibilities and staying competitive in the global market.