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Budapest’s Blockbuster Business

Budapest’s Blockbuster Business

Issue 10.3
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Hungary has traditionally been the go-to hub for filming in Continental Europe. DLA Piper Partner Monika Horvath and Dentons Partner Timea Bana talk about the evolution of Hungary’s film industry over the past decade and whether the country has maintained its position as the primary European filming destination.

Hollywood East

In recent years, “Hungary has not only maintained its position as the go-to production location in Europe but has increased its significance and strength,” Bana begins. “Interestingly,” she points out, “recently, Jamie Lee Curtis referred to Hungary by the nickname of Hollywood East.” 

“In daily life, local citizens may often find film trucks standing on public streets of the city center of Budapest or in the Buda Castle,” Horvath continues. “If you watch movies or television series, it is easy to identify parts of Budapest and realize how many international productions were actually shot in Hungary,” she adds, highlighting that “there is a long list of examples. To mention a few, Budapest doubled as Paris (Colette, Radio Active, Mrs. Harris Goes to Paris), Berlin (Atomic Blonde), Moscow (Die Hard 5, Black Widow, Red Sparrow), Vienna, or Milan. It is also more often that Budapest plays itself: Spy, FBI: International, Red Sparrow, The Spy Who Dumped Me,” Horvath notes.

“Although other CEE countries, such as Poland, the Czech Republic, and Romania, are trying to attract more productions by applying similar incentives, Hungary remains the number one destination for foreign, especially US-based, production companies in Europe after London,” Bana adds.  

Architecture, Food, and Night-Life – And the Solid Industry To Back It All Up

According to both lawyers, there are some specific features that motivated foreign filmmakers to opt for Hungary as their filming destination, starting with gastronomy and nightlife. For Horvath, “the hundred different architectural styles of Budapest are an important factor to attract international productions,” highlighting again that “Budapest provides the possibility to shoot scenes as if in Paris, Moscow, Berlin, Rome, Milan or Vienna.” On top of that, she highlights that “Budapest is still more cost-effective than most of these other cities,” and “has modern studio facilities, the highest technical quality equipment rental offering as well as VFX and post-production houses.”

“Actors and other members of the cast usually speak with great respect about the vibrant cultural and gastronomic scene in Hungary and especially Budapest,” Bana says. “Several world-renowned actresses and actors have been known to frequent Budapest’s restaurants and nightlife.” Additionally, according to her, “in recent years, several high-quality studios have opened their doors to production companies.”

The Clincher? Supportive Legislation

Still, Horvath and Bana highlight that one factor has contributed to the success story of Hungary’s film industry more than any other: “legislation in Hungary is very producer friendly. The government has declared its intention to attract as much movie production as possible by providing the tax rebate and by removing administrative and technical barriers,” Bana says.  

“The highest motivation for productions in coming to Hungary is the existence and amount of the Hungarian tax credit and the reliability of the system disburse funds,” Horvath agrees. “The Hungarian tax credit means a refund guaranteed and paid out by the Hungarian state currently amounting to 30% of the direct film production costs of a film that is registered by the National Film Office of Hungary as eligible for indirect state support. Film production costs incurred in Hungary, and partly outside of Hungary, would also qualify for the Hungarian tax credit.”

“Financial support schemes are available in more European countries, but none of them has the same financial scale as in Hungary,” Horvath continues. “The size of the support is capped at a much lower level and the applicable percentage of actual production costs is generally 20% or 25%, so lower than in Hungary.” It helps that “productions go to specific locations mostly if the storyline requests specific geographical or architectural locations,” according to her, while “generally, qualifying the program for a tax credit scheme is rather burdensome from an administrative perspective and productions try to make use of such incentives only above a certain production size.”

So, Hungary has the best of both worlds: great locations and a solid support system. Sure, Horvath notes, “from time to time the productions have to queue and wait for the actual payment for a couple of months, but in the end, they receive the approved payments.” As a result, Bana says that the legal sector had to evolve with the market. According to her, the country has highly skilled “lawyers and accountants, who can help companies apply for the tax rebate, provide labor law advice on actor contracts, help protect intellectual property, and provide other assistance which is essential to the production of world-class motion pictures.” She highlights that while “such professional expertise is also available in London, the costs of production in Hungary are significantly lower.”

The Red-Carpet Special Treatment

Looking back at the past ten years, Bana and Horvath highlight that one of the biggest challenges that the film industry faced in Hungary was related to the COVID-19 pandemic. As it turned out, the industry got all the help it could have needed. 

“During the pandemic, there was approximately a two-month hiatus when traveling was restricted and lockdown regulations were rather unclear and made the work of the productions totally uncertain,” Horvath points out. “After the initial two months, productions resumed around June and July 2020, returned to Hungary, and returned to work.”

According to Horvath, the “Hungarian authorities provided special treatment for film productions and enabled international production crew and cast to enter the borders of Hungary for film production purposes nearly seamlessly, through the COVID-19 pandemic. Studios and production facilities issued their own COVID-19 riders applicable during production.” Luckily, she notes that “applying health and safety rules was taken very seriously by those productions.”

For Bana, Hungary’s relatively lenient lockdown and travel rules were the decisive factor for continued activity in the industry: “during the global COVID-19 pandemic, most studios were shut down due to lockdown rules,” she notes. “In Hungary, however, the lockdown rules and travel bans were not as strict as in the US or other EU countries.” According to her, “this allowed movie production to continue in Hungary in a time of unprecedented global crisis. Due to the looser rules, although the first year of the pandemic caused a slight drop in movie production, Hungary benefitted from a significant head start after the lockdown rules and travel bans were lifted in other countries – which led to a major rise in production in the first years after the pandemic.” 

This article was originally published in Issue 10.3 of the CEE Legal Matters Magazine. If you would like to receive a hard copy of the magazine, you can subscribe here

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