Wall Street seems to have initially granted a pause to the tariff war initiated by the U.S. president. Policymakers are taking declining growth forecasts more seriously – even in the United States. In Germany, we are witnessing a new political approach that promises companies stability and planning security. With Wolfram Weimer, the industry has also gained a genuine entrepreneur at the Commissioner for Culture and Media (BKM), advocating for deregulation and economic sustainability. Meanwhile, U.S. President Trump caused confusion followed by an international echo from the film community with his announcement of tariffs on “foreign” films. It’s doubtful this matter is already resolved. Therefore, questions familiar from co-production agreements remain: When is a film considered American or not-American? And what should tariffs even apply to?
Fun fact: The U.S. has not yet reached such an agreement with any other country.

If one actually uses co-production agreement definitions as a guide, probably not many films would be affected – or maybe they would – no one really knows. But President Trump seems particularly intent on bringing filming and post-production work back to the U.S. Productions tend to choose countries – as we know all too well in Germany – with an attractive mix of reliable technology, a sufficient workforce, and above all, film subsidies. These subsidies must be reliable, easy to apply for, and ideally uncapped, so they also provide enough leeway for large projects.

Why is production such a key factor? The answer is regularly provided by publications from Olsberg SPI, the global leader in impact studies on film incentives. The “ripple” effect leads to a wide range of positive outcomes for a location. Beyond the immediate tax and economic benefits through production-related spending and the consumption stemming from crew salaries, plus some marketing effects, the decision on where production takes place yields lasting benefits for the location.

Professional filmmakers and local technical service providers anchor expertise and make value creation at a location possible in the first place. Especially technical firms provide the necessary continuity through cross-project investments and long-term employees. That’s exactly why most countries’ incentives target what’s known as “local spend” – the expenses within the funding region. Production companies are inherently project-driven, as shown by the ratio of permanent to project-based staff. Their high scalability is a strength – but it often leads to regulatory challenges since these are based on average employee numbers, not the actual business scale.

The sustainability of funding strategies is quite straightforward. MFG Baden-Württemberg, for instance, specifically targeted VFX and animation companies early on. As a result, the density of such firms – including employment numbers, training opportunities, and knowledge transfer to other sectors – is above average across Europe, even though the Southwest hasn’t traditionally been a major film hub. Studio Babelsberg and Bavaria Studios, both founded well before the Federal Republic, have long served as natural destinations for filmmakers, reference projects, and ultimately as synonymous with a professional film economy. Likewise, “Pinewood” or “Barrandov” stand for film production, not content.

However, “Hollywood” equals “film,” even though most major studio productions aren’t even shot there. Infrastructure without content is worthless. The dual approach outlined (again) in the coalition agreement – supporting production companies through broadcaster investment obligations and enhancing Germany’s competitiveness as a production hub with a simple, automatic system (tax incentive) – complements the federal cultural funding landscape.

The actual effectiveness of the so-called tax incentive is what matters most for production companies in order for them to accept the system. That includes the scope of eligible expenses, the simplicity of the application process, but especially the immediate liquidity effect. Models requiring intermediary pre-financing are hardly accessible anymore for independent companies in Germany and would thus undermine the overall effectiveness of the measure.

Your Markus Vogelbacher

and the Ensider:Team 

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