Lucia Borgonzoni, Italy’s undersecretary of state to the ministry of culture, finally unveiled details of the country’s revised international tax credit at the Venice Film Festival last week.
Borgonzoni talks to Screen about the changes the Italian government has made, why it is ruling out some AI elements from relief and when producers can apply,
What are the key changes as far as the international industry is concerned?
It’s a priority to bring foreign capital into our country through productions that can generate wealth and related activities…The overall structure remains unchanged, with the basic tax rate at 40%. The tax credit is granted within an annual maximum limit of EUR20m for each company or group of companies, while there is no maximum limit per work.
However, we decided to introduce some new measures such as, for example, some limitations to the use of AI, compliance with collective agreements for workers, and compliance with the protocol against harassment. Post-production companies have long waited for the requirement that at least one day be spent filming or working on Italian soil. We have also established the benefit is granted provided the eligible cost is at least EUR250,000.
Why have you regulated about AI in the tax credit?
Because it is important for us to protect the creativity of artists by guiding in a clear and regulated manner a process of technological innovation that is already profoundly changing all the stages of filmmaking.
The audiovisual industry represents a very fertile ground for the development of artificial intelligence. This process has such a huge potential so much so that every day we get news of new applications.
At operational level, we have provided for the non-eligibility of costs incurred in the national territory relating to the use of artificial intelligence, except for the use of artificial intelligence connected to special effects under the heading ‘main actors’. This provision only applies to the Italian executive producer.
To ensure maximum transparency, we have included the obligation to disclose the stages of the work carried out on the national territory for which artificial intelligence was used, as well as the obligation to provide for in the contracts between the Italian executive production or post-production companies and the filmmakers, cast and crew, specific clauses allowing them to deny their consent to the exploitation of their work/image/professional performance by artificial intelligence systems.
What are your hopes and expectations for the revised international tax credit?
I would like to share with you some statistics that show the attractiveness of this tool. 354 films and television series (mostly from the US or UK) applied for international credits between 2016 and 2023. This amounted to a total credit of EUR878m. The total investment generated in this timeframe was huge: EUR2.38bn.
This is the most ‘industrial’ leverage we have available in our law and we intend to strengthen it further in the coming years. The fact that the American majors, with whom I regularly exchange views on the sector and meet to discuss the issues, always show great excitement, is a testament to the competitiveness this powerful tool. The deadline for the application has not changed. The final application must be submitted within 180 days from the conclusion of the activities.
When will it become law and open for applications?
By the end of September, the inter-ministerial decree will be published (we have already received the green light from the Ministry of Economy and Finance and are waiting for the opinion of the Ministry of Enterprise and Made in Italy). Within this year it will be possible to file applications.
Why has taken so long to publish details of the new international tax credit? Do you agree that the uncertainty over the changes to tax credits has led to a decrease in filming in Italy in this year? We also intervened in the national tax credit, and selected funds which will be significantly strengthened from 2024. In order to complete this work, we held long discussions with all operators in the sector and, following a tight and constructive dialogue, we are now ready to give new impetus to the cinema and audiovisual sectors.
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