Cash rebates

In order to attract foreign film producers to Ukraine, Ukrainian President signed a law introducing amendments to the law "On State Support for Cinematography in Ukraine". It entitles foreign filmmakers to get cash rebates up to 25% of eligible expenses depending on certain criteria and type of expenses.

Amount of cash rebate and types of expenses which can be qualified for cash rebate

The foreign film production entity shall be eligible to cash rebate of 25% of the qualified expenses incurred by it in the course of the film production, if the above requirements regarding the entity and the film are fulfilled.

The foreign film production entity may be additionally entitled to 5% cash rebate if at least one of the following criterions is met:

  • at least four cultural criteria of the cultural test (as described above) are exclusively Ukrainian (culture/history/mythology/religion/architecture/environment, etc.);
  • the film contains scenes (at least 5% of the total film length) in which the characters of the film read a book(s) by Ukrainian author, and the storyline/screenplay/central theme focuses on the actions of the film's characters in a way that makes it possible to identify the book(s) of the Ukrainian author;
  • the storyline/script/central theme of the film is based on Ukrainian literary work;
  • the storyline/script/central theme of the film is based on events of aggression against Ukraine and the film directly the asses the illegal actions of country-aggressor.

The following expenses shall be qualified for cash rebate:

  • salaries and other fees of individuals (actors and film crew);
  • purchase of goods, services;
  • rental of property;
  • other costs directly related to the production of a film produced in Ukraine.

Importantly, only those expenses which have been incurred in the course of transactions with those Ukrainian taxpayers which applying under general system of taxation may qualify for cash rebate (i.e. not payers which use special tax regimes such as simplified taxation system).

At the same time, the following costs cannot be qualified for cash rebate:

  • depreciation of fixed assets, other non-current tangible and intangible assets;
  • the cost of negotiations;
  • financial expenses (including interest on loans);
  • operating expenses not included in the cost of the film production;
  • the cost of distribution of the film;
  • travel expenses for travels outside of Ukraine;
  • wages or any other types of remuneration paid to the actors and film crew who are non-residents of Ukraine, except for the expenses which are taxable in Ukraine.

Separately, the foreign film production entity may claim for reimbursement of 10% ( if personal income tax was paid in the city of Kyiv) or 4.5% (in case if personal income tax was paid in the territory of Ukraine other than city of Kyiv) of the remuneration of actors and film crew, who are non-residents of Ukraine, carry on their business and/or reside outside Ukraine (if such payments are taxable in Ukraine).

Requirements to a film

The foreign film production entities may claim cash rebate for a film that passed a cultural test. The cultural test consists of a cultural criterion and a production criterion. A film is considered to have passed the cultural test if it has scored at least 2 points on cultural criterion and at least 18 points on production criterion.

Examples of cultural criterion (2 points each):

  • the storyline/screenplay/central theme of the film is based on events that are part of Ukrainian or European culture/history/mythology/religion;
  • the film is based on a well-known character/personality of Ukrainian/European culture/history/religion or Ukrainian/European society;
  • the storyline/screenplay/central theme of the film is based on Ukrainian or European literary works;
  • the film reflects important Ukrainian and/or European value(s): solidarity/equality/protection of human rights/tolerance/protection of the environment/respect for cultural or family traditions/critical thinking/the rule of law.

Amount of points that can be earned for production criterion vary from 0.5 to 4 points. Please see below the examples of production criteria each scoring up to 4 points:

  • the shooting takes place on locations, in interiors or studios in Ukraine and the number of shooting days in Ukraine is at least 50% of the total number of shooting days;
  • Ukrainian service providers are engaged in the pre-production stage for at least 50% of the total number of pre-production days;
  • the amount of money spent on the film in the territory of Ukraine exceeds 50% of overall expenses.

At the same time, the cultural test requirement shall not apply if both of the following requirements are met:

  1. at least one of the following services are provided in Ukraine:
    • organization of production, production itself and/or animation;
    • post-production;
    • computer graphic design (CG), including creating visual effects (VFX).
  2. at least 50% of persons involved in provision of services are citizens of Ukraine.

Download program here.