Where's financially best to film your commercials?

For commercials producers that are looking to save money, the best way to do so is usually to go looking for cheaper places to shoot – examples being Eastern Europe, Spain or South Africa. Having said this, it is clear that tax incentives could prove decisive in some situations. If it’s a question of deciding between a number of similar US states, for example, then a decent incentive might tip the balance one way or the other.

Equally, a European or Asian country that can offer both low costs and an attractive tax break is well-placed to win work. This is certainly an option for countries that don’t have a track record in audiovisual, but want to make a mark in the business.

In reality, there aren’t many places that currently offer commercial producers incentives. Below, we look at some of the countries and regions that have a good track record with commercials production, and identify which have incentives.

USA: Incentives

The US is blessed with all the raw materials you need to make great TV commercials, such as diverse locations, high-quality acting and technical talent, state of the art camera and lighting equipment and cutting edge post-production and graphics companies. It’s no real surprise, then, that the vast majority of US commercials are shot domestically, according to the AICP (Association of Independent Commercials Producers). In a 2012 survey, it found that only 12% of commercials went abroad.

Where incentives come into play is in encouraging commercials producers to switch from one state to another. States that have incentives applicable to commercials include: Alaska, Colorado, Florida, Hawaii, Kentucky, Minnesota, Mississippi, New Mexico, New York, North Carolina, Pennsylvania and Texas.

Other states may also accept applications from commercials, but not necessarily on terms specifically targeted at commercials. For example, South Carolina says commercials will qualify as long as they meet the standard $1m spending requirement. By contrast, Florida has a specific category for commercials that says: “A minimum of $100,000 per commercial must be spent. A production company must spend at least $500,000 within one fiscal year to apply.” In other words, Florida has a lower bar to entry for commercials than for films but is seeking to encourage producers to return.

Similar conditions exist in other states, so check out our filming guides for specifics.

Canada/Australia/New Zealand/South Africa: No Incentives

Canada is a very desirable production destination thanks to the quality of its infrastructure, the depth of its talent-base and its world-beating incentives. British Colombia, Ontario and Quebec are all Canadian states that offer attractive tax incentives for vfx and animation but not for commercials. Commercials are also excluded from eligibility for the national tax credit.

The situation is similar in Australia, New Zealand and South Africa where there are attractive tax credits for film, TV, post-production and vfx but not for television commercials. Locations, climate and - in the case of South Africa – cost, are the real attraction.

Western Europe: No Incentives

The UK, France, Germany, Italy, Ireland and Belgium all have film and TV tax incentives and all have strong commercials businesses. But the latter group don’t benefit from the former incentives. In the UK, the Treasury's Creative Sector Tax Reliefs document, published in April 2014, states that tax relief is available to film, TV, animation & video game production but not commercials.

In Spain, which is a popular location for commercial shoots, there are some incentives for TV and film but not for advertising. It is possible that any attempt to include advertising within such schemes would need to secure EU approval. The EU pays close attention to the film incentives sector to ensure that countries are not distorting the way the single market functions.

Eastern Europe: No Incentives

Eastern European countries such as the Czech Republic, Hungary, Poland, Romania, Bulgaria, Serbia, Croatia, Lithuania and Latvia are all popular locations for commercial producers because of their lower costs. There are attractive Czech and Hungarian tax credit systems but these don’t extend to TV commercials.

Although there are no incentives for commercial producers currently, this is a region where it might make sense for some countries to incentivise commercials as a way of standing out from the strong regional competition (so keep your eyes peeled for more news on this).

Asia-Pacific: Malaysia Incentives

Malaysia wants to position itself as the regional filming hub and, to that end, offers a 30% tax rebate for TV commercials. The level of investment required by producers is not specified, so should be discussed with Malaysia's film office FINAS. More details can be found in our filming guide. Malaysia’s main regional competition comes from Singapore, which has attractive support mechanisms for film but not commercials.

Middle East: Abu Dhabi Incentives

Twofour54, Abu Dhabi’s media & creative industries hub, and the Abu Dhabi Film Commission (part of twofour54), recently launched the Middle East’s first incentive scheme. The incentive, in the form of a rebate of up to 30% of qualifying spend in the Emirate of Abu Dhabi, is available for advertising production. This is an indicator that Abu Dhabi would like to win work from neighbouring Emirate Dubai – which has a longer track record in TVCs. Dubai has no formal incentives but it is worth an ad hoc discussion with the film commission to see what support they can offer.

Israel is another territory in the region that has recently improved its tax incentives to attract productions. Once again, however, the focus is films and TV – not commercials.

Latin America & Caribbean: Trinidad & Tobago Incentives

Mexico and Colombia both have attractive film and TV tax incentives, but again commercials are not eligible. Chile, with a wealth of varied locations in close proximity of each other, is a popular spot for commercials producers but has no incentives at all. The same goes for the Dominican Republic.

One place definitely worth checking out is Trinidad & Tobago where the film commission has a Production Expenditure Rebate Programme that provides rebates up to 55% for expenditures on qualifying local labour and 35% on other local expenditures. But note the sliding scale for rebates, which shows that you need to spend US$1m+ to get access to the full rebate. Projects in the US$100,000-US$500,000 band, for example, generate a rebate of 27.5% for labour and 12.5% for other expenditures.

Who gets what?

One issue producers need to be aware of when seeking commercials tax rebates is who the rebate actually belongs to. This issue has arisen in the US with the Association of National Advertisers claiming that rebates should revert to advertisers. This is disputed by the AICP, though the reality is that few producers would risk the wrath of advertisers or agencies by digging in their heels on this point.

All of which raises the question – why would a producer bother to go in search of incentives if they weren’t going to benefit. The only rationale perhaps would be to keep the advertiser or agency happy.

If you are aware of any other incentive programmes for commercials producers please get in touch and let us know.