Film and Audiovisual Tax Credit: What’s Changing Under the 2025 Budget Law
2025 Budget Law: With the passage of Law No. 207/2024, the landscape of tax incentives for the audiovisual and film sectors is changing. New thresholds, stricter selection criteria, and a strengthened role for the government in managing rights to works have been introduced. Greater selectivity, public rights, and digitization
With the passage of the 2025 Budget Law (Law No. 207/2024), the Italian film and audiovisual sector is facing a significant shift in the regulation of tax incentives, particularly with the introduction of new procedures for accessing tax credits and a strengthened public role in the management of rights to funded works.
Amendments to Law 220/2016: All Articles Affected by the Revision
Section 869 of the 2025 Budget Law amends seven key articles of the film industry legislation, revising funding, tax credits, selective grants, and digitization.
The core of the reform lies in paragraph 869 of the bill, which consists of seven subparagraphs (a through g) and amends various articles of Law No. 220/2016, the framework law on cinema and the audiovisual sector. The changes concern both financial instruments, such as funds and tax credits, and cultural and strategic initiatives, such as the digitization and promotion of audiovisual heritage.
There are 7 articles under review:
Art. 12 – Objectives and types of intervention;
Section 13 – Investment Development Fund;
Section 15 – Tax credit for manufacturing companies;
Art. 21 – General provisions on tax credits;
Art. 26 – Selective grants for projects of high cultural value;
Section 29 – Special Plan for Digitalization;
Section 32 – Public Register of Works.
New rules for the tax credit for manufacturing companies
Flexible rates and differentiated criteria: how the tax credit for producers is changing
The tax credit will no longer be a fixed amount but will range from 15% to 40%, with eligibility contingent on qualitative, size-related, and territorial criteria. Particular emphasis is placed on supporting European and independent productions.
One of the most innovative aspects concerns Article 15, which pertains to the tax credit for film and audiovisual production companies. The new mechanism provides for a range of between 15% and 40% of production costs, leaving ample discretion to the secondary legislator through ministerial decree.
Toward a more strategic and merit-based tax incentive
The 40% cap is no longer guaranteed: it will be up to ministerial decrees to adjust the rate based on the type of project and the beneficiary, taking into account cultural impact and economic sustainability. Adjustments will be made based on qualitative and size-related criteria
The credit will be determined based on objective criteria such as:
Size of the company or group;
Eligible costs and maximum spending limits;
Distribution channel (cinema, TV, OTT platforms);
Involvement of national broadcasters or international co-productions;
The company’s membership in the European Union and its independence in production.
This selective approach reflects a European trend toward focusing public resources on culturally significant and economically viable projects. In France, for example, the Centre National du Cinéma (CNC) has for years employed a similar system of selective support aimed at strengthening the diversity of the film industry.
A specific cap is being introduced on the compensation paid to the artistic and technical personnel involved in the production.
The goal is to avoid imbalances in the distribution of tax benefits and promote transparency. Toward a more “intelligent” tax credit
The 40% cap will no longer be the rule, but rather an exception reserved for strategic productions. The tax credit thus becomes a smart incentive, designed to reward quality, innovation, and deep roots in the European industrial fabric.
New common rules for credit: tighter restrictions on professional fees and greater transparency
Substantial changes also affect Article 21, which sets forth the common rules for the allocation of tax credits to all entities in the industry chain (production, distribution, exhibition, and post-production). Paragraph 869(d) introduces a new limit on professional fees eligible for tax credits.
The limit applies exclusively to manufacturing companies;
It is set in accordance with the provisions of Decree-Law No. 201/2011, Section 23-ter;
It takes into account the type of production and the nature of the work (e.g., acting, directing, technical).
The measure is intended to prevent a significant portion of the tax benefit from being absorbed by high fees, ensuring instead a more equitable distribution of resources throughout the entire production process.
Strategic Developments: State Rights, Selectivity, and Digitization
The government becomes a co-owner of the rights: the paradigm of public funding is shifting
The law provides for the possibility of the government sharing in the proceeds from funded projects. This is a completely new development in the Italian system, designed to make the film fund more independent and self-financing.
1. Rights to works: the government becomes a co-owner
For the first time, the legislation allows the government to acquire a share of the economic rights to works financed through tax credits. The revenue generated by this share will be reinvested in the Film and Audiovisual Fund, with the aim of making the system self-financing and self-sustaining.
This measure is modeled after the German Filmförderungsanstalt (FFA), where public funding may involve profit-sharing arrangements.
2. Doubling of resources for selective grants
More funding for selective programs and outreach: making room for innovative, high-quality projects
The portion of the Film Fund allocated to direct support for works of cultural value has been increased to 30%. This is a clear signal of a commitment to promoting creative excellence and expressive diversity.
The percentage of the Fund’s resources allocated to selective grants and promotional activities is increasing from 15% to 30%. This will strengthen support for:
Works of high artistic and cultural value;
Experimental and independent projects;
International promotional initiatives.
3. Ongoing digitization of audiovisual heritage
Ongoing digitization: $3 million a year to preserve audiovisual heritage
The plan to digitize our cultural heritage is becoming a permanent, structural initiative. This is a key measure for safeguarding Italy’s cultural identity and expanding access to our historical audiovisual archives.
The Digitization Plan is becoming a permanent initiative, with an annual budget of 3 million euros starting in 2025. The goal is to ensure the preservation, accessibility, and enjoyment of Italy’s audiovisual heritage. This reinforces the commitment to modernizing the sector and preserving our collective cultural memory.
Conclusions: Toward a More Sustainable and Competitive Ecosystem
The 2025 tax credit reform marks a decisive step toward a more selective, sustainable, and strategic funding system, in line with best European practices. The introduction of flexible rates, public co-investment in rights, cost containment, and the expansion of promotion and digitization lay the groundwork for a more robust, international, and culturally significant audiovisual industry.
Italian cinema, which receives support but is also expected to take on greater responsibility, is now called upon to respond with quality, innovation, and a strategic vision, thereby consolidating its position on the global stage.