Romania could become a favorite destination for film producers if it puts into practice on a national level state aid schemes for the movie industry similar to those applied in other EU member states in Central and Eastern Europe, shows a PwC Romania study.
Currently, the aggregate turnover of the film industry in Romania is of approximately 53 million Euro, out of which 82% was generated by foreign films shot in Romania. The sector employs directly 650 to 750 film professionals and pays up to 5 million Euro in taxes to the state budget every year.
Also, the sector has an important multiplication effect in the wider economy, generating revenues of up to 149 million Euro in sectors that are connected to the film industry. As such, the PwC study estimates the total economic impact of the Romanian film industry at approximately 200 million Euro, between 1600 and 1800 workplaces created and up to 22 million Euro worth of taxes paid to the state budget.
“Although Romania benefits from a film infrastructure comparable to that from the developed markets in Europe, of very gifted film professionals, widely acclaimed on the global stage, as well as very diverse film locations, which has helped us to attract some significant foreign productions, the local film industry is faced with a relative stagnation in recent years. The overall costs for film productions in Romania are competitive, but the cost difference to other countries in the region (estimated at 3-5%) is not big enough to compensate for the lack of tax incentives that most of the countries in the region offer”, stated Bogdan Belciu, Management Consulting Services, PwC Romania, one of the authors of the study.
The state aid measures implemented by other countries in the region from the moment of the adoption of the EU State Aid Schemes for the Film Industry in 2001 have lead to a rapid increase in foreign film productions within the EU countries. For example, the Czech movie industry has reached 260 million Euro, in Hungary the sector increased by 7-8 times, up to 230 million Euro. The estimated value of the state aid schemes for the film industry in the EU countries is up to 3 billion Euro per year.
“A state aid scheme, similar to those implemented succesfuly for other economic sectors, could contribute to the rapid development of the sector in Romania. According to our estimates, the foreign film productions in Romania could increase by up to 7 times, reaching up to 350 milllion Euro and a total aggregated economic impact of up to 1.4 billion Euro, over 5600 workplaces and taxes paid of 110-140 million Euro. Added to this there could also be indirect benefits from promoting the country abroad and tourism development”, stated Mihaela Mitroi, Tax and Legal Services Leader, PwC Romania.
If such a state aid scheme would be applies, PwC estimates that it will generate budget revenues up to 4 times higher than the value of the subsidy, which is estimated at up to 35 million Euro per year (paid only if Romania attracts relevant and eligible film productions). About PwC:
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