This article was produced by Olswang LLP, which joined with CMS on 1 May 2017.
Now in force, the bi-lateral treaty enables qualifying co-productions to access national incentives in both the UK and China. As such, a qualifying co-production will be treated as a "domestic film" in both the UK and China, meaning it will be eligible for the film tax credit and BFI Film Fund in the UK and will not be subject to China's quota system for foreign films, meaning more British films will make it on to the big screen in China. The Chinese quota system currently only permits 34 non-domestic titles to be screened in Chinese cinemas on a revenue sharing basis each year.
To qualify for co-production status, a film will need to meet all of the requirements set out in the treaty and must be approved by the competent authorities in the UK (the DCMS) and China (State Administration of Press, Publication, Radio, Film and Television). As with other co-production treaties, in the UK, the application process is administered by the BFI. The main requirements for qualifying status are:
(i) the film must involve co-producers based in both the UK and China;
(ii) unless the Competent Authorities otherwise agree, each co-producer must:
- play an active role throughout production, including involvement in production planning and decision-making;
- assume responsibility for carrying on practical and financial arrangements for the making of the film;
- directly negotiate, contract and pay for rights, goods and services;
- have entered into a binding contract with the other co-producer(s), the terms of which reflect the respective responsibilities of each co-producer; and
- contribute a specified percentage of the finance and production spend for the film from their respective countries. In the case of a co-production involving UK and China co-producers only, ordinarily, the total financial contribution of the parties taken together must be not less than 20% and not more than 80% of the total production cost. Where the co-production involves other third party co-producers (who would be eligible to participate in a co-production with the UK or China pursuant to another co-production treaty) the financial contribution of the UK co-producer, Chinese co-producer and third party co-producer taken together must be not less than 20% and not more than 70% of the total production cost.
In certain specified circumstances, the treaty permits for a co-producer to be a financial only co-producer provided that such financial co-producer(s) contribute not less than 10% and not more than 25% of the total production cost.
Welcoming the ratification of the treaty, Amanda Nevill, BFI CEO said:
"This film Co-Production Treaty represents a hugely significant moment for UK film and opens the door to a relationship with the largest growing film industry in the world, allowing our filmmakers to collaborate with and contribute to this success story. I'm very excited by the opportunities for growth and shared success, both creatively and commercially, that this treaty presents for the UK and China."
For further information please contact Jacqueline Hurt.
