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Hungarian filmmakers at crossroads – due to tax system changes

Hungarian filmmakers at crossroads – due to tax system changes

In Hungary, the simplified tax conditions in force since 2015 have created very favorable conditions for film professionals. However, the amendments to the tax law effective from 1 January 2021 created a new situation in the terms of Hungarian staff working in film and television productions. According to a group of filmmakers, they will be adversely affected by the change, which could even lead to a significant price increase.

“Film professionals have received a letter from one of the major film production companies that they will not contract with people using KATA [flat-tax system where you pay a fixed monthly amount to cover all your Hungarian tax obligations as a self-employed person] in the future. The question came, what kind of B or C plan is possible after this? We weren’t attentive enough at the legislative level either, we realized late, we should have organized sooner. Last spring, changes began to be made public, which was voted on in parliament” – said Krisztina Balázs makeup and hair master, the initiator of the 3,7k size protesting facebook group.

The protesters took action

There was a lot of discussion about how to apply pressure. Eventually, they came to the choice of the most formal way to do this: write a letter to the decision makers.

“We drafted a protest letter referring to the KATA Act, which came into force on January 1, 2021, and asked that the changes be suspended as soon as possible, then revoked or amended, especially with regard to the current state of emergency. We sent this protest email to 300 recipients: decision-makers, including pro-government and opposition politicians, and official bodies such as the Budapest Chamber of Commerce and Industry, the National Film Institute, the parliamentary economic committee, but also the Ministry of Finance.” –  the founder of the group added.

“They responded from several official places, most of them a polite but meaningless response that will be dealt with. Csaba Káel, [the government commissioner for the advancement of the Hungarian cinema industry], also indicated that steps would be taken towards the government in December, but there has been no reaction since then.”

Csaba Káel – Hungarian film director, government commissioner for the advancement of the Hungarian cinema industry. The National Film Institute was founded under his leadership.

Present situation

“Currently, if a company employs make-up artists, from the daily fee 40-50% comes down, so we get a fraction of the salary before. Filming is not a simple job, we also work 14 hours a day in very extreme conditions, so it’s not worth working on. The other problem I face is that filmmaking as a job is not valued. Plenty of big foreign companies also come here, they give jobs to thousands of people. These companies bring in big money, which is good on the one hand, because they give jobs.”  – said Krisztina Balázs, the initiator of the protesting facebook group.

Hungary at its peak in film productions

Hungary is currently among the world leaders for providing film production services to international production houses and filmmakers.

Related

Thanks to the country’s long-standing, and recent, interest in film production, Hungary is home to many skilled crew members. While most of them may find more stable work at the key studios and production houses, many of them (as with a lot of crew worldwide) are devoted to passion projects which seek to push the envelope of the medium.

Money, money, money…

At the end of the day, where and how a film gets produced will likely be down to a number of economic reasons. But, once again, this is a department where Hungary will appear very appealing to filmmakers, producers and production houses alike.

Most directly, Hungary offers a tantalising 30%+ 7.5% for film productions—which compares to a maximum of 25% in the UK and 20% in Germany. (See details at hungariantaxcredit.com)

Tax rebate in Hungary (c) NFI

Negotiable overtime rates, working hours and working terms

Moreover, due to (on average) longer working hours, which often run up to 12 hours, unfavourable overtime fees are less likely to rack up on productions within the country. This can easily be paired with the fact that there are no unified trade unions for film production in Hungary—a fact that obviously has both positive and negative ramifications. But for incoming productions, the positives resound—seeing more negotiable overtime rates, working hours and working terms.

Changes are inevitable

In the fall of 2020, even before the parliamentary decision, one of the largest film service companies informed in details those working in the industry how they could change their tax payment obligations if the law was amended.
Hungarian film professionals who wanted to prepare for the changes thus had several months to look for new solutions. The available options include choosing to tax around 24% in a sole proprietorship, but for many, a larger joint venture can be a solution. establishment.

In the case of the latter, a kind of professional collaboration of film professionals is expected, which also foresees the possibility of stronger advocacy.

It is not yet known how the Hungarian filmmaker community, which is currently fighting the pandemic, will start, but the 40% price increase swung by a group of thousands organized on Facebook will certainly not help preserve Hungary’s competitiveness.

What do employers say?

According to an anonymous film producer interviewed by the Budapest Reporter:

“Most of the productions come from abroad mainly because the price of the services and the refund system are very good in Hungary. This is an attractive factor. If small entrepreneurs working in the film industry want to make significant changes to their daily fees, this is likely to continue to ring in the market. This could worsen Hungary’s position.”

Bright future?

It is clear that Hungary is currently among the world leaders for providing film production services to international production houses and filmmakers.

Film set in Hungary – a 4800 m3 size reinforced concrete structure pool made by Hungarian ARC design for Blade Runner: 2049

And after climbing to the top by creating state of the art studios, training new generations of crew and attracting global attention, the future of the Hungarian film industry looks brighter than ever.
The remaining question is: how to handle the current situation.

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