What are the costs of the transaction

From the gross benefit, there are three areas of expenditure the producer must take into account and for which he is responsible:

i. Payment of the guarantee fee to the guarantee bank (referred to in the business as the defeasance bank). Rates that are independently negotiated by the producer are approximately 0.4-0.5 per cent depending on which bank the producer selects. Again, it is a highly important tax principle that the producer must arrange and negotiate the terms of his own guarantee.

ii. The producer's own legal fees. These fees have come down over the last couple of years as documents have become more standardized.

iii. Certification fees. In order to obtain a British Film Certificate, which is required for a qualifying film and which is issued by the Department for Culture, Media and Sport (DCMS), an external audit must be carried out by an auditor who must produce a cost statement that is submitted to the DCMS. For British films the cost of this is approximately £5,000 but may be considerably more expensive in relation to a complicated co-production between various countries.

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Film Making

Film Making

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