Funding

France is arguably one of the most supportive of its national cinema industry among its European neighbours, and even in the rest of the world. Its very generous subsidy program for cinema and video is worth around 250 million euro annually and is managed by the Centre National de la Cinématographie (CNC), a public institution under the authority of the French ministry of Culture and Communication. In addition, funding for cinema is also available from numerous other national and regional authorities.

To complement this public funding, France has put into place various mechanisms to facilitate or encourage investment in cinematographic production, via tax benefit schemes for private investors or production societies (the SOFICAs and the crédit d'impôt respectively), and via organizations such as the Institut pour le financement du cinéma et des industries culturelles (Institute for the financing of cinema and the cultural industries, IFCIC).

• the CNC
  • presentation
  • the cinema support fund: le compte du soutien
  • eligibility for CNC funding
  • automatic and selective funding mechanisms
• funding from national and regional authorities
• the SOFICAs
• the Crédit d'Impôt
• the IFCIC
• the role of French television
• European funding
• useful links
  • - CNC www.cnc.fr
  • IFCIC www.ifcic.fr
  • Ministry of Culture and Communication www.culture.fr
  • Ministry of Foreign Affairs www.france.diplomatie.fr
  • European Audiovisual Observatory: KORDA Database http://korda.obs.coe.int/
• useful references

The Centre National de la Cinématographie (CNC)

The CNC was created by the act of 25 October 1946 and was established as a public, administrative, financially autonomous legal entity under the authority of the French minister of Culture and Communication. Initially it was conceived primarily as an instrument of economic regulation for the sector, its mission being to reorganise the market and put into place industrial policy and regulatory provisions. However, once financial support for the cinematographic industry was introduced in 1948 (act of 23 September), collection of monies and allocation of subsidies became one of its major responsibilities – it administrates economic support not only for cinema, but for the audiovisual and multimedia segments in France more broadly. Other responsibilities of the CNC include the promotion and distribution of cinematic and audiovisual works, as well as the protection of authorial rights, intellectual property and cinematographic heritage in France.

website: www.cnc.fr (in French only)
contact: Direction de la Communication
12 rue de Lübeck
75784, Paris cedex 16
FRANCE
tel. +33 1 4434395
fax+33 1 44343473

the cinema support fund: le compte du soutien

The Compte du soutien financier de l'Etat à l'industrie cinématographique (the state support fund for the cinematographic industry) was created in 1959 and is the major source of subsidies to the film industry in France. Subsidies are available for all sectors of the industry, including for film production and distribution, exhibition, exportation and for related technical industries. Although the CNC administers and directs the fund, it remains technically under the control of the Parliament, the trustees and the Cour des comptes (the court of accounts).

The fund is divided into two sections: cinema and video (section I) and audiovisual (section II). In 2003, the fund was worth 449,3M euro, with section I redistributing 240M euro in subsidies and section II 209M euro.

The funds available in section I are largely the product of taxes on various sectors of the cinematographic industry:

1. cinema tickets are taxed at a rate of 10.9%. This tax is known as the taxe spéciale additionnelle, or TSA
2. video is taxed at a rate of 2%
3. pay and free-to-air television is taxed at 5.5%
4. on-line commerce of films is taxed at 2%

The CNC also receives grants from the state budget (contributions from the Ministry of Culture and Communication) which vary from year to year, and in addition to this, the compte du soutien is replenished by repayments of loans it has granted (such as the avances sur recettes).

In 2002, contributions to the CNC's compte du soutien from these various sources were as follows:

ORIGIN	AMOUNT (€)
state	approx. 33 million
tax on cinema tickets (TSA)	103 038 766
tax on television industry	315 200 000
tax on home video industry	12 653 268
other taxes	76 225
repayments to the fund and other revenues	12 729 493

(from T.11 in André Lange and Tim Westcott, Public funding for film and audiovisual works in Europe – a comparative approach, European Audiovisual Observatory, Strasbourg 2004, p64-65)

eligibility for CNC funding

Only films accredited by the CNC may have access to the compte du soutien and all the various subsidies that it offers, with accreditation being based on two sets of criteria, some based on the film itself and others on the production companies involved. Essentially, it is a question of a film satisfying the criteria of French nationality to gain access to financial aid (articles 7 and 10 of Decree no 99-130 of the 24th February 1999 'Décret rélatif au soutien financier de l'industrie cinématographique' outline these criteria) – although there is no definition of a 'French film' per se, accreditation is based on a points system with two different scales, where films gain points on the basis of French (or sometimes European) nationality or a nationality which has signed co-production agreements with France.

The first of these points scales is a 'European' one, composed of 18 points corresponding to different characteristics of the film – 12 points relating to artistic characteristics and 6 relating to technical characteristics. A film must obtain a minimum of 14 points to qualify as a 'European film' and gain access to subsidies from the French state.

Once a film has thus qualified, the amount of financial aid it can receive is determined by a second, more precise, scale of 100 points. It is necessary to obtain at least 25 points to get accredited by the CNC, 50 points gives access to half the maximum sum of aid, while 80 points is enough to obtain the maximum financial benefit. Points are attributed as follows:

20 points	French language film
10 points	producer
10 points	writer
20 points	actors, principal and secondary roles
14 points	director and creative crew
6 points	technicians and other workers (EU nationals)
20 points	post production techniques, studios, laboratories, sets (costs outlaid in France for these expenses)

For example, where the producer is concerned, there are 3 main criteria upon which French nationality is judged:

1. the production group must be established in France and hold an accreditation from the CNC
2. the directors of the production group must either be French nationals, nationals of a European Union member state, or at least have residency status
3. the production companies must not be controlled by one or several physical or moral individuals not of European nationality
4. If a film satisfies these criteria, it is awarded 10 points according to the above scale.

Automatic and Selective Funding Mechanisms

AUTOMATIC FUNDING MECHANISMS

Automatic funding is funding to which applicants have automatic access, as long as they have fulfilled the required criteria (ie. accreditation by the CNC, see eligibility for CNC funding) and followed the application procedures correctly. Automatic funding from the CNC's compte du soutien exists for film production, distribution and exhibition.

Automatic funding for film production

producers are credited, (to an account opened in their name at the CNC), a sum of money calculated as a function of the commercial success of their film. On average, the producer receives 70 cents for every ticket sold, but a rough estimate of the total amount can be made using the following formula: funding = film box-office receipts x TSA x 130%. Broadcasting of the film on television and its release on video also generate a return for the producer, which is credited to his/her CNC account.

However, this automatic funding comes with an important obligation - Monies deposited in these accounts can only be mobilised for re-investment in a subsequent film accredited by the CNC. If these funds are invested in a French language film, the CNC will increase the available funds by 25%.

In 2004, producers mobilised 53.7 million euro of automatic funding for film production.

There are also two automatic funding mechanisms available specifically for short-films:

1. a pre-production aid for films that already have some degree of financial backing from a feature-length film producer
2. a pre-production aid from COSIP for films that have audiovisual financial backing from a producer and from a television channel

Automatic funding for film distribution

distributors of CNC accredited films can benefit from automatic funding in much the same way as producers. They also receive a sum of money proportional to the box-office success of their film. In 2004, 30 Distribution societies supported the distribution of 68 accredited films for which they received total funding of 14.2 million euro.

Automatic funding for film exhibition

These subsidies are designed to finance the establishment of new cinemas and the modernisation of existing ones, including equipment upgrades. In 2004, the CNC received 595 dossiers from exhibitors requesting financial aid and it outlaid a total of 66.7 million euro. Specific funding mechanisms include: ‘support for the production of additional prints' (aide au tirage des copies) and ‘support for cinemas within the 'Art and experimental cinema' network and for independent cinemas' (aide aux salles classes 'Art et essai' et aux salles indépendantes).

SELECTIVE FUNDING MECHANISMS

Selective funding is awarded to films according to a series of qualitative selective criteria and generally involves a more rigorous selection process, with funding being awarded after examination of the film / scenario by specialised commissions. These selective funding mechanisms are aimed at promoting the quality of national cinematic production and improving distribution conditions. As opposed to automatic funding mechanisms, which respond to economic objectives, the objectives of selective funding are cultural and artistic. Once again, selective funding from the compte du soutien of the CNC exists for film production, distribution and exhibition.

Selective funding for film production

les Avances sur recettes (advances on takings)

Instituted in 1959, the advances on takings funding mechanism is aimed at encouraging and nurturing first-time film makers as well as supporting more independent, more original works than are the commercial norm. Applications for this funding are examined by a commission made up of leading members of the cinematographic profession (one chairperson, 3 vice chair-persons and 32 members), but only about 10% of applications are successful and are granted the avances sur recettes by the Director General of the CNC. Authors, directors or production companies may apply (as long as they fulfil the nationality criteria), and projects are considered in two separate groups (there are 2 colleges that form the Commission) – those that are first films (college 2), and those by directors that have already made at least one feature-length film (college 1). Though advances are usually granted prior to filming, they may also (less commonly) be granted after the film is made.

These advances are interest-free loans (repayable from the receipts of the film) rather than grants. They must be repaid wherever possible, if not from the film's box-office takings, then from the automatic aid granted to the film's producers (see ‘automatic funding for film production')

In 2004, 70 films received the avance sur recettes prior to production, receiving total benefits of 21.85 million euro, while 14 films received the avance sur recettes after production, receiving total benefits of 1.31 million euro.

Aid for script-writing (or re-writing)

Instituted in 2002, the aid for script-writing is available to all writers and directors that have previously successfully written and directed a feature-length film, while the aid for re-writing is open to all writers and producers. In 2004, the CNC distributed 520000€ amongst 28 films, including 12 aids for writing and 16 for re-writes.

Development aid

Designed to help producers develop their projects; to cover costs for things such as location research and feasibility studies.

Aid for international co-production

These subsidies are often granted according to bilateral agreements - for example, France and Germany have co-production agreements, which resulted in 8 of their co-produced films receiving funding worth a total of 1.77 million euro in 2004. Under this title the CNC also attributes money to cinematographic production in developing countries (in 2004, 19 such projects received a total of 1.8 million euro in funding).

Aid for foreign-language films

Instituted in 1997, this funding is aimed at supporting the production of feature-length foreign-language films made by French directors or foreign directors of a certain distinction. In 2004, 8 films received funding, the total amount of which was 670000€.

Aid for the production of short-films

The CNC has four different selective aid mechanisms for short-film production

1. the 'contribution financière' which is granted prior to production and aims to encourge new talent
2. the 'aide au programme', available to companies in the production sector and aimed at promoting the growth of the most dynamic and successful companies
3. the 'prix de qualité', granted post-production, which aims to acknowledge quality films that have not benefited from state aid and thus to compensate the producers for the financial risk undertaken
4. the 'aide audiovisuelle' from COSIP (the support account for the audiovisual programme industries, operated by the CNC) available to films that have been financed in part by a television channel

Selective funding for film distribution

By offering selective funding for film distribution, the CNC is attempting to support independent enterprises whose activity favours an increase in the diversity of the cinematographic spectrum. For example, they offer a subsidy for independent distribution companies (Aides aux enterprises de distribution indépendantes), which can allow for the wide distribution of quality films whose release on the market would otherwise represent a significant financial risk. There is also selective funding available for the distribution of: feature films for young audiences (aide selective à la distribution de films destinés au jeune public); of retrospectives or re-issued classic films; of re-edited films; of documentaries; of films from lesser-known cinematographic traditions and for distribution campaigns. In 2004, the CNC supported the distribution of 52 films at a total cost of 962000 euro.

Distribution aids also aim to support the circulation of quality commercial films from countries whose films are little known in France. The French Ministry of foreign affairs (Ministère des affaires étrangères) contributes to this funding of film distribution along with the CNC, and in 2004 20 foreign films (4 from Asia, 8 from Latin-America, 1 from eastern Europe, 3 from northern Africa and 4 from the Middle East) received funding amounting to a total of 375000 euro.

Selective funding for film exhibition

The CNC offers a 'selective support to exhibitors for the modernisation and construction of cinemas in rural areas' (aide selective à la creation et à la modernisation de salles). This funding mechanism is designed to finance the modernisation of movie theatres and technical equipment as well as to promote the creation of new cinemas, especially in rural areas and on the outskirts of large cities. The amount of funding allocated to cinemas is proportional to the annual product of the tax levied on the price of the ticket (ie yearly TSA generated by box-office receipts at the cinema in question), and is calculated according to a digressive and re-distributive scale that is supposed to privilege small and medium-scale cinemas. (DIBIE p47). This funding is also available to support projects in France's overseas territories and departments.

In 2004, 70 projects benefited from a total of 10 million euro in funding (equivalent to 19% of the total costs of renovation and modernisation works undertaken by applicants in this year).

***See the Korda database for a full list of all the specific funding mechanisms available and the details of each http://korda.obs.coe.int/

	2002	2003	2004
number of films receiving regional funding	22	40	49
amount (M€)	7.22	9.94	11.26

source: CNC BILAN STATISTIQUE : La production cinématographique en 2004, p29 'les financements régionaux'

Local authorities that offer funding:
- Communauté urbaine de Strasbourg
- Conseil général de la  Charente-Maritime
- Conseil général de la Corrèze
- Conseil général de la Sarthe
- Conseil général de l'Eure
- Conseil général de l'Isère
- Conseil général de Loire Aquitiane
- Conseil général des Côtes d'Armor
- Conseil général de Seine-Saint-Denis
- Conseil général de Val de Marne
- Conseil général de Finistère
- Conseil général du Lot
- Conseil général du Puy-de-Dôme
- Ville d'Aubagne

The SOFICAs

The French acronym SOFICA stands for 'Sociétés pour le financement des industries cinématographiques et audiovisuelles' (Societies for the financing of the cinematographic and audiovisual industries) - essentially investment societies whose aim is to collect funds that will be consecrated exclusively to the financing of audiovisual and cinematographic works accredited by the CNC.

Created in 1985 (law no856695, 11 July 1985) at a time when the financing of film production was becoming increasingly difficult in France due to a decrease in cinema attendance, the SOFICAs were designed to encourage private investment in the industry by offering investors generous tax benefits – investors may deduct the sum invested in a SOFICA from their taxable income, up to a limit of 18000€ or 25% (whichever is lower) of their total taxable income for the financial year. To receive this tax benefit, however, investors must retain their shares in the SOFICA for a minimum of 5 years, and thus the SOFICA scheme is aimed at attracting investors who are subject to the highest tax bracket and are willing to invest their money long-term. 5000€ is usually the minimum possible investment.

SOFICAs are often run by banks or other financial institutions who will recruit investors and then, once enough money is raised, invest in the production of a CNC approved film. Many of the principal SOFICAs are associated with larger companies that are linked to the cinematographic industry such as UGC, Canal Plus or Polygram. Some examples of SOFICAs are: Sogécinéma, Banque Populaire Images, Cofimage and  Soficinéma.

Investors will eventually benefit from the box-office receipts of this film and therefore the majority of funding from SOFICAs naturally tends to go to films with greater commercial potential rather than to independent productions. However, SOFICAs are obliged to reserve at least 35% of their capital for investment in independent productions.

The following table shows the contribution of SOFICAs to the financing of cinematic production in France over the past eight years:

	1997	1998	1999	2000	2001	2002	2003	2004
Films financed by SOFICAs	48	59	67	59	59	56	61	55
Of which films of French origin	46	59	66	58	59	56	58	53
SOFICA investments (M€)	27.68	27.72	26.09	39.03	24.78	33.26	39.23	27.67

Source: CNC BILAN STATISTIQUE : La production cinématographique en 2004, p23 'l'intervention des SOFICAs'

The Crédit d'Impôt

A recent addition to the infrastructure of French cinema funding, the crédit d'impôt  (tax credit) was introduced by the Loi de Finances of 1994. It allows production houses established in France to obtain credits against the tax that is normally imposed on such organizations. This arrangement is designed to encourage these companies to carry out production works on CNC approved films in France (rather than abroad) and is granted for 'production expenses corresponding to operations carried out in France as part of the making of feature-length cinematographic works or audiovisual works. These works must be accredited.' (by the CNC)

Production expenses outlaid in France must correspond to a minimum of 38 points out of 40 in order for companies to obtain this fiscal benefit. Attribution of points is based on the following scale:

14 creative technicians
6 workers/labourers
20 filming and post-production costs

If granted, the crédit d'impôt is equal to 20% of eligible expenses, but is fixed at an upper limit of 500 000 € for fiction films and documentaries or 750 000€ for animated films.

Although this funding device is only very new, it appears to already be having something of a positive impact on the industry, as the following two indicators would seem to suggest: Firstly, there was a large decrease in the number of co-productions amongst films of French origin over the 2003-2004 period, meaning that a greater proportion of production money was being spent in France ; and secondly, there was an increase in the number of weeks spent filming in France (and consequently, a decrease in the number of weeks spent filming French-proposed films overseas or elsewhere in Europe).

the IFCIC

The IFCIC, or institute for the financing of cinema and the cultural industries, was created in 1983 and accredited by the Bank of France as a creditor organization. It is an independent and neutral organization whose aim is to help finance the industry by guaranteeing the credits granted to professionals in the cinema sector. Essentially, it is a question of inciting banks to more readily accept the particular risks associated with granting loans to the cultural industries.

Hence, the IFCIC does not provide subsidies or loans to producers or film makers, but instead acts as a guarantor for short and medium term loans. The IFCIC is able to do this thanks to the 'fonds de garantie cinéma / audiovisuel' (cinema / audiovisual guarantee fund) of the CNC (worth 42 M€ in 2003), which is made up largely of state endowments and which the IFCIC uses to cover its liabilities.

The IFCIC operates mainly at the production level by guaranteeing production credits usually to the extent of around 55% of their total amount, though it will sometimes absorb up to 70% of the risk taken by the financial institution (even up to 90% in the case of 'cultural films'). However, in order to obtain the IFCIC guarantee, at least half of the credits must have been granted by one of the main financial institutions specializing in cinema financing: the UFCA, COFICINE or COFILOISIR.

The IFCIC acts as counter-guarantor (financial guarantor?) for almost half of all the films produced in France, and often up to 75% of independent French productions.

The role of French television

France is one of only two countries in Europe (the other being Portugal) that imposes a tax on the income of television companies in order to bolster the budget of the national public funds for cinematographic production (the CNC's compte du soutien). In fact, this tax is so lucrative that over half of the CNC's funds come from the television industry, compared to only about 15% coming directly from the state.

The law on the audiovisual sector of January 1989 obliged all unscrambled, terrestrial television channels to allocate a minimum of their annual net turnover to cinematic production, with specific regimes being agreed to for each channel, or else a minimum financial ceiling. This regime was replaced the following year, by Décret no 90-66 of the 17th of January 1990, which obliged television companies to invest 3% of their net turnover for the previous accounting period in co-productions with the cinema industry.

These sorts of regulations are revised relatively frequently and in 2001 (Decree of 9th July) this percentage was upped once again, with all television channels broadcasting more than 52 feature-length films per year being required to give 3.2% of their annual net income to European cinematographic production. Out of this 3.2%, at least 2.55% must be spent on French language productions (see heading I of the decree).

The obligations for private, pay-TV channels are different, however. For example, Canal Plus is required to pay 18.5% of its pre-tax revenue to subsidise the movie industry. In return, the channel receives the right to carry French films, but film-makers receive the money from Canal regardless of whether their films attract viewers.

European Funding

French film-makers and producers may also obtain funding from European sources. The two largest and principal sources of available aid are: the European Union's MEDIA programme and the Council of Europe's Eurimages programme.

MEDIA
The global objectives of the EU's MEDIA programme are:
-  to increase the circulation of European audiovisual works inside and outside of the EU
- to preserve and enhance Europe's cultural diversity, as well as it's cinematographic and audiovisual  heritage
- to increase the competitiveness of the European audiovisual sector in an open and competitive market

Begun in 1991, the MEDIA programme is now in it's 3rd incarnation, MEDIA Plus, and will soon be succeeded by MEDIA 2007:

• MEDIA I (1991-1995)
• MEDIA II (1996-2000)
• MEDIA Plus (2001-2005, extended until the end of 2006 and to be succeeded by MEDIA 2007)

The funds available to the MEDIA programme come from the EU's Community budget and hence originate from member state contributions. MEDIA is open to European professionals and audiovisual societies established in the EU, and thus French cinematographic and audiovisual productions may benefit from MEDIA programme financial support. Applications are made to the European Commission, which takes the final decision on project approval after receiving the evaluation of a specialized intermediary organization that examines the dossiers. There are, however, certain limits on the process – for example, a production company may only submit one individual project per year for MEDIA programme funding.

There are two sections to the MEDIA programme :

1. MEDIA training
   Financial aid for training in the areas of new technologies, in management or administration of audiovisual companies and for the writing of screenplays.
2. MEDIA development, distribution and promotion
   Financing for the development of individual projects and for the implementation of commercial development strategies, for distribution and promotion of audiovisual works (not just cinema)

MEDIA 2007 will combine these two sections, with support for distribution remaining a priority. The EU Commission has proposed a budget of 1055 Million Euro for the programme, to run betweem January 1st 2007 and December 31st 2013

Europa Cinemas

This initiative was set up in 1992 under the MEDIA programme with support from the CNC. It is a Paris-based organization that manages a range of support schemes for the cinema exhibition sector. The MEDIA programme is the largest contributor to Europa's budget (which was 5,7 million euro in 2002), which it spends by offering awards  (of between 15,000 and 50,000 euro) to cinemas which offer programmes of European films. Cinemas are required to invest at least the same amount as the funding they receive from Europa.

For more information on the MEDIA programme or Europa cinemas, see:

www.europa.eu.int/comm/avpolicy/media/index_en.html
www.europa-cinemas.com/en/index/php

Eurimages

Created in 1988 by the Council of Europe, Eurimages is a fund aimed at supporting the co-production, distribution and exhibition of European cinematographic works. It has 32 member states who all make annual financial contributions to its coffers, making their nationals eligible to profit from its three support programmes:

1. production aid (to which 90% of the funds are consecrated)
2. distribution aid
3. aid to cinemas

Since its establishment, Eurimages has supported 1037 European co-productions for a total amount of around 300 million euro.

www.coe.int/T/E/Cultural_Co-operation/Eurimages/