December 5, 2019

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Coproducing between France and Brazil


With an economic growth at its scale, Brasil has seen its audiovisual media change with cultural politicies and new consumer habits. Therefore the number of cinema increased on the territory, just like the audience and cinemas digitisation has sped. At the same time, the government has reinforced its audiovisual sector support, which sometimes has complicated the french movies entry on the territory.


Signed on 18th May 2010 by the CNC President, Véronique Cayla, and her brasilian counterpart, Manoel Rangel, the ANCINE President, which is the brasilian relevant authority, the co-production agreement between France and Brasil first provides classic measures. Therefore the co-product work is considered national for both of the countries, which enables advantages of both authorities, and shootings on french or brasilian territory, just like national technicians, are preconditions to benefice from the agreement.


The previous agreements between France and Brasil concerned particularly relations between co-producers, the aim being a minimum balance. The 2010 agreement innovation is a pragmatic revision of this minimum : Then the agreement put up with a minority share of 10% and reciprocally a majority share of 90%.  But this measure is exceptional because it has to be authorize by both of the relevant authorities without which the common law has to be apply : a minimum 20% minority share. Co-producers will have to justify that their respective contributions are actually « unbalanced » because the text mention that the distribution has to correspond with a reality and that each producer has to contribute to benefit from the agreement. For this purpose, the relevant authorities  check this co-production balance every two years. In order to help co-producers to fulfill the agreement obligations, it is provide that each country will facilitate the free movement of shooting equipment and team, with a free stay for the latter.


But in spite of this cooperation good will, the challenge is to match two very different audiovisual sector. Indeed, if Brasil has a larger territory than France, it only has produced 127 movies in 2013 versus 270 in France. With a very weak cinema park for the size of its territory, Brasil is fond of television, especially telenovelas which are exporting all around the world and clearing the majority of the brasilian publicity receipts. In parallel, the problem of access to cinemas, which are concentrated with production sites in the same region, and the high price of tickets make that few brasilians are going to cinema (in 2009 82% of brasilians was saying that they were never been to cinema). This context has weakened the cinematographic diversity of the country. Indeed the non-brasilian and non-anglo-saxon movies market share was 10% in 2009 versus 2% in 2011, the Brasil audience focusing at 79% on anglo-saxon movies and at 19% on brasilian movies. The latter are mainly commercialized by big productions, with concentrated investments, and benefits from an easier market penetration.


So the co-production agreement between France and Brasil is of interest because benefiting from the brasilian nationality, co-production can benefit from ANCINE support measures. Therefore, the number of co-production between Brasil and foreign countries moved from 5 in 2000 to 25 in 2010. But the agreement is also of interest in that Brasil has at its disposal an atypical movie financial system as much than effective. Organized in the early nineties, after a national cinema failure facing foreign countries, the law known as Rouanet has allowed a revival of the national cinema by arranging a private sponsorship culture through tax deductions. Therefore the brasilian movie financial system is build on three mechanism which have unbalance successes :


At first the Audiovisual Sector Fund (FSA on ANCINE website) is equivalent to a direct and selective support. Built up in 2006 by a federal law, it provides an aid to programs linked to Brasilian audiovisual sector through calls to tender. The FSA funds  mainly arise from CONDECINE (National Movie Sector Development Taxation) which is a tax on diffusion, production, licences and movie distribution on video for commercial purposes. The FSA work on four budgetary policies : Programs and full length films independent production, licences purchases, marketing and and full length films distribution. If this mechanism constitutes a negligible portion of brasilian movie financing (32% in 2010 according to ANCINE), it however has the merit of being an important support to independent films in order to face up to commercial movies stem from incentive taxation. But ANCINE also organized two automatic supports according to brasilian movies box office and international festivals results, which also works through calls to tender : It’s the Box Office Price (box office sales threshold) and the Incentive Quality Program (point obtained on a selection of festival threshold). Those funds which are distributed through those programs (production, distribution and theaters) have to be reinvest on the sector. Unfortunately, this automatic support was only embodying 3% of the public support in the sector in 2010.


FUNCINES ( Financing Movie Sector Funds) look like our SOFICA. They are private investment funds managed by brasilian financial institutions, authorized by the brasilian central bank, whose funds have to be invest on ANCINE approved projects, which tend to support production, distribution and theaters. Therefore companies which contribute to FUNCINES can deduct up to 3% of the investment from their corporation tax in exchange for movie profit sharing and a promotion of their brand. As for private individuals , they can deduct up to 6% of the investment from their income tax.


Incentive taxations, public and indirect support to the movie sector, are remaining the principal source of funding (65% in 2010). Set up in 1991 by the Rouanet Law and in 1993 by the Audiovisual Law, they are very diverse. At first the Rouanet Law set up a tax deduction for companies and private individuals, respectively of 4 and 6%, which were investing in the form of sponsorship or donation in the brasilian independent movie. This law still exist but it’s rarely used by project managers who usually have recourse to the Audiovisual Law mechanisms. Therefore the first article of the Audiovisual Law provides a tax deduction of 3% for companies, and of 6% for private individuals, which are investing on broadcasting rights purchases. This mechanism authorized investor companies to receive a share on the producer receipts. The 1 A article of the same law also provides a tax deduction of 4% for companies and of 6% for private individuals in exchange for investments as a patron in preservation, commercial distribution, theaters and production of brasilian independent movies. To invest as a « patron » implies that investors can’t benefit from the aid movie, which probably explain the larger possibility of deduction for companies. For as the third article of the law, it set up abatements. Indeed, according to the brasilian law, taxpayers who are receiving income from foreign movies exploit in Brasil are paying a tax of 25%. This tax also apply on national or foreign TV channel. Therefore the thirs article of the law offer them a 70% abatement on this tax if those funds are investing on brasilian audiovisual project development. This mechanism is of interest because it has encourage the movie sector and TV channels to collaborate in production without decree an obligation to TV channels. A 2001 Law also has exempted international television broadcaster, benefiting from brasilian television market share, of 11% of the CONDECINE on condition that they invest the corresponding saving on brasilian independent coproduction.


Therefore co-produce with a brasilian producer can be interesting for a french producer in that the fundraising will be quite natural in such country. But Brasil doesn’t exploit its market as much than its territory would enable it, because of a financial and geographic concentration of investors and theater. Therefore, for the moment, there is only a tiny diffusion of brasilian art house movies, historically prolific yet.

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