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PR(99)07: The EFTA Surveillance Authority opens formal state aid investigation concerning measures to attract film production to Iceland

27.9.2002

On 11 March 1999, the Icelandic Parliament adopted a law bill on temporary repayment of costs of films produced in Iceland.  The EFTA Surveillance Authority received notification of the measures only after they had been adopted.  In its decision the Authority has concluded that the measures involve State aid, and that they are therefore unlawful on procedural grounds.

The objective of the measures is to attract foreign parties to produce films and television programmes in Iceland through repayment of up to 12% of production costs incurred in Iceland.  Films whose production costs are below IKR 80 million (approx. EURO 1,03 million) are not supported.  The full rate of support is reached by films whose production costs are IKR 121 million (approx. EURO 1,56 million) and above.

In order to qualify for support, an application must meet certain conditions, e.g. that a company must be established in Iceland for the production of the film, a detailed plan of production costs and financing must be made, minium production costs of IKR 80 million, production must be completed within three years and production costs shall be verified by an auditor.  On the other hand, the law does not in any way restrict or delimit the types of films eligible for support, e.g. by the themes of eligible films, the markets or audience aimed at, etc.  The law is in fact in no way limited to supporting films and television programmes of any particular cultural value and could equally be used to support films of a commercial character.

In spite of a generally favourable attitude towards aid genuinely intended to promote culture and preserve heritage, the EFTA Surveillance Authority has doubts that State aid to the film industry of the kind covered by the Icelandic law could be considered compatible with the EEA Agreement.  The Authority has therefore decided to open the formal State aid investigation and requested the Icelandic authorities to refrain from applying the aid scheme and suspend any payment of aid until the Authority has taken a final decision in the matter.

For further information, please contact Mr. Amund Utne (tel. 286.18.50) or Mr. Guðlaugur Stefánsson (tel. 286.18.52).

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