National Film Office - Decree

Registration of Motion Picture Productions Requiring Indirect Subsidies, Issuing of Subsidy and Investment Certificates

Section 11 (1) On the basis of section 31(3) of the Act and points 36 and 37 of section 4 of Act LXXXI of 1996 on Corporate Income Tax and Dividend Tax (hereinafter: the Act on CIT), the Bureau registers the motion picture productions requiring indirect subsidies and issues the subsidy and investment certificates qualifying for receiving indirect subsidies in the procedure defined in the present chapter.

(2) For the purpose of registration of the motion picture production in accordance with paragraph (1), the motion picture producer and the motion picture producing enterprise shall, in addition to the items defined in section 6(4) of this decree, also file with the request the following
a) the Hungarian production plan of the motion picture,
b) an extract from the Company Registry not older than 30 days of the Hungarian enterprise participating in the production in case of motion pictures produced on order, or of the Hungarian motion picture producer in case of motion pictures not produced on order,
c) the contract concluded between the Hungarian enterprise participating in the production and the foreign motion picture producer (the ordering party) in case of motion pictures produced on order,
d) the budget on the direct costs of motion picture production arising in Hungary (countersigned by all co-producers, sponsors and investors) and its financial plan,
e) in case of motion pictures not produced on order, the documents certifying the cover of the direct motion picture production costs arising in Hungary,
f) an extract from the general ledger for the exclusive ledger account assigned to the motion picture production for the last day of the month preceding the current month,
g) a request of the motion picture producer or the motion picture producing enterprise regarding the scheduling of the issue of the subsidy and investment certificates by the Bureau out of the options provided in section 13.

(3) Prior to the issuing of the resolution on registration, the Bureau examines whether the budget of the production complies with the facts stated in the documents and declarations filed. Provisions of sections 6 (6)-(7) shall be applied for the registration procedure.

(4) The resolution on registration can only be issued if the Bureau has previously registered the motion picture producing enterprise in case of motion pictures produced on order and the Hungarian producer of the motion picture in case of motion pictures not produced on order. The resolution shall contain the amount of direct eligible motion picture production costs incurred in Hungary in respect of the motion picture production and the respective permanent registration fee.

(5) Those costs that can be taken into account as direct motion picture production costs, which create income (with the exception of royalties) for the beneficiary of the payments pursuant to the Act on Personal Income Tax or the Act on Simplified Entrepreneurial Tax or the Act on Corporate Income Tax and Dividend Tax.

Section 12 (1) On the basis of the declaration of the motion picture producer or the motion picture producing enterprise on the completion of the Hungarian production phase of the motion picture production or a certain phase of production as defined in the resolution of the Bureau and the request for the issue of the subsidy and investment certificate, the Bureau performs the audit of the motion picture production and the budget established in the resolution on the permanent registration of the production.

(2) In the request or within 15 days of the receipt of the resolution establishing the acknowledged amount of direct motion picture production costs incurred in Hungary defined in paragraph (4) at the latest, the names, seats and tax numbers of the sponsors or investors shall be provided to the Bureau and the applicant shall also attach to the request documents verifying its eligibility for the application of the certificate, i.e. documents (contracts) certifying the existence of the subsidy or investment.

(3) The Bureau performs the audit of the motion picture production on the basis of the general ledger extract filed by the motion picture producer or the motion picture producing enterprise. In justified cases, the Bureau may also request accounting documents in relation to the production and may also review the accounting of the motion picture producer. In the course of the audit, the Bureau may eventually take into account the auditor’s reports regarding the motion picture production as well.

(4) At the request of the motion picture producer or the motion picture producing enterprise defined in paragraph (1), the Bureau establishes the total amount of direct eligible motion picture production costs incurred in Hungary or its proportionate part for the phase of production concerned and issues subsidy or investment certificates if the motion picture producer or the motion picture producing enterprise had reported the beneficiaries of the subsidy or investment certificate as described in paragraph (2). In case of several sponsors, investors, the Bureau issues the certificates by taking into account the limitation in points 36 and 37 of section 4 of the Act on CIT. The beneficiary of the subsidy certificate is the sponsor of the motion picture production or the investor and a copy of the certificate shall be sent to the motion picture producer or the motion picture producing enterprise.

(5) In addition to the items defined in points 36 and 37 of section 4 of the Act, the subsidy and investment certificates shall also contain the registration number of the motion picture production and the date of providing of the subsidy or investment.

(6) The Bureau shall preserve the documents received in relation to the subsidy and investment certificates for a period of ten years following the issuing of the certificate and shall surrender these at the request of eligible bodies.

(7) Subsidy and investment certificates can be issued if the motion picture producer or the motion picture producing enterprise performs motion picture production as its main activity and in the two years preceding the filing of its request for registration as defined in this section it prepared balance sheets and filed corporate income tax returns. If the last condition is not fulfilled the issuing of the certificate is subject to credible proof of the employment of an expert who has previously been the producer of at least two all-evening motion pictures.

13. § (1) The Bureau issues the subsidy or investment certificates following the completion of the Hungarian phase of the motion picture production in respect of the entire costs of direct Hungarian motion picture production, unless requested in a different scheduling, in several phases by the motion picture producer or the motion picture producing enterprise in accordance with section 11(2).

(2) If the motion picture production is not completed by 31 October of the year in which the request defined in section 11(2) is filed, the motion picture producer or the motion picture producing enterprise shall have the right to request the issue of the subsidy or investment certificate on the direct Hungarian motion picture production costs incurred by 31 October (the first phase of motion picture production).

(3) If the motion picture production is not completed within nine months from the filing of the request defined in section 11(2) or the direct production costs incurred in Hungary with respect to the motion picture production exceeds HUF 150 million, the motion picture producer or the motion picture producing enterprise shall have the right to request the issue of the subsidy or investment certificate quarterly.

(4) In case of applying the provisions of paragraphs (2) and (3), the amount indicated in the certificate (the aggregate amount in case of certificates issued to several sponsors, investors for the same motion picture) may not exceed 20 percent of the motion picture production cost incurred in Hungary until the issuing of the certificate.