Committed to boosting the prospects of its film industry, Cyprus has introduced a package of incentives encouraging international producers to select Cyprus as their film destination (the “Film Scheme”).

The Film Scheme grants tax incentives including cash rebates (partial refund of the amount invested on the film) or tax credits, as well as tax discounts on the investment made on equipment and infrastructure, and VAT returns on expenditure in scope.

What incentives and rebates are available?

The incentives under the Film Scheme are:

  • Cash rebates
  • Tax credits
  • Tax allowances for investment on equipment and infrastructure
  • VAT return on expenditure.

While total aid cannot exceed 50% of the total production budget (or 60% in the case of a co-production)., this limit can be lifted if the production can be deemed to be beneficial for the economy, culture, or the development of the Cypriot film industry.

Applicants can apply for either the cash rebate or the tax credit.  If applying for a cash rebate, an applicant may also apply for a tax allowance and return of VAT.  Similarly, an applicant that selects to apply for a tax credit under the scheme may also apply for a tax allowance and return of VAT.

Who can apply?

Eligible entities must meet be registered in Cyprus or another EU Member State, provided that they carry on business in Cyprus following approval of their application to the Film Scheme.  There are no restrictions on foreign ownership in the eligible entity.

Eligible entities are each restricted to one audiovisual production approved under the Film Scheme, with an exception for certain group productions of documentary or TV series.

What films are eligible?

The following films are eligible for an application under the Film Scheme:

  • Feature / long films (minimum duration of 1 hour, or 45 minutes when in IMAX)
  • Television films, series or mini-series
  • Animated films (computer-generated or otherwise)
  • Creative documentaries      
  • Transmedia and cross-media productions (using different media)
  • Reality programmes (provided they promote Cyprus)

Certain types of audiovisual productions are expressly excluded from the Film Scheme, including sporting events, game shows, current affairs or talk shows, as well as certain educational and lifestyle programs. 

What expenditure is eligible?

A wide range of investment and expenditure is covered under the Film Scheme, including, without limitation:

  • production services
  • labour costs and wages for cast, extras and crew
  • accommodation in Cyprus
  • audio equipment, camera and lighting rentals
  • vehicle (air, ground and sea) rentals
  • catering
  • scenery constructions
  • electricity and generators
  • air and ground travel
  • professional services (legal, accounting, insurance).

Incentive 1 – Cash rebate

The cash rebate incentive has the following key features:

  • maximum aid is 35% of eligible expenditure made in Cyprus
  • minimum expenditure in Cyprus of at least:
  • €200,000 in the case of feature films
  • €100,000 for television drama series or self-contained drama films
  • €50,000 for documentaries
  • €30,000 for other television programmes
  • the production must satisfy the authority’s cultural assessment
  • maximum aid for each production is €650,000.

Incentive 2 – Tax credit

This incentive effectively lowers the corporate tax payable by a successful applicant. Its key aspects are the following:

  • maximum aid shall represent 35% of eligible expenditure made in Cyprus.
  • minimum expenditure depends on the type of film and must not exceed 50% of the total production budget
  • the production must satisfy the authority’s cultural assessment
  • the tax credit must not exceed 50% of the total taxable income in the year the production is made
  • the tax credit may be carried forward on certain conditions.

Incentive 3 – Tax allowance

This incentive provides tax allowances for investment in eligible infrastructure and equipment, reducing taxable income:

  • the aid cannot exceed 20% of eligible expenditure for small enterprises and 10% for medium enterprises
  • eligible infrastructure and equipment includes premises, studios and filming equipment
  • eligible investments in tangible and intangible assets are also covered subject to conditions
  • equipment must remain in Cyprus for at least 5 years.

Incentive 4 – VAT returns

A successful applicant will be entitled to a VAT refund for qualifying production expenditures incurred in Cyprus by natural or legal persons from third countries which are related to the implementation of a production.