Procedures for the Granting of the State Budget Co-financing for Filming of Foreign Films in Latvia

Issued pursuant to
Section 11 of the Film Law

I. General Provisions

1. This Regulation prescribes the procedures by which the National Film Centre (hereinafter - the Centre) shall grant the State budget co-financing for filming of foreign films in Latvia.

2. In order to grant the State budget co-financing for filming of foreign films in Latvia (hereinafter - the co-financing), the Centre shall organise an open tender.

3. A project for the tender may be submitted by micro, small, medium and large enterprises in accordance with Article 2(24) of and Annex 1 to Commission Regulation (EU) No 651/2014 of 17 June 2014 declaring certain categories of aid compatible with the internal market in application of Articles 107 and 108 of the Treaty (hereinafter - Commission Regulation No 651/2014) which have been registered as film producers in accordance with the procedures laid down in laws and regulations and have entered into a contract regarding the intent to film a film in Latvia with a film producer registered in the Register of Latvian Film Producers and the Commercial Register of Latvia.

[18 December 2018]

4. The co-financing may be granted in accordance with Article 54 of Commission Regulation No 651/2014, not exceeding the threshold value indicated in Article 4(1)(aa) of the abovementioned Regulation and in conformity with Article 1(2)(a) and (b) of the abovementioned Regulation in relation to the average annual budget of an aid scheme, as well as if the project conforms to all of the following conditions:

4.1. the film is partly or completely filmed in Latvia;

4.2. services of such natural persons or legal persons are used in filming of a film which are registered in Latvia;

4.3. the total costs of the film project for feature films and animated films reach at least EUR 711 436, and for documentary films - at least EUR 142 287;

4.4. the financing available to the producer on the day of submitting the project according to the financing plan is at least 50 % of the total costs of filming a film.

[27 August 2013; 18 December 2018]

5. It shall not be allowed to apply for the co-financing, if:

5.1. the project submitter complies with the attributes of an undertaking in difficulty specified in Article 2(18) of Commission Regulation No 651/2014;

5.2. the project submitter has tax debts and debts of mandatory State social insurance contributions on the day of submitting the project;

5.2.¹ the project submitter is subject to an outstanding recovery order according to a previous Commission decision which is referred to in Article 1(4)(a) of Commission Regulation No 651/2014;

5.3. the project submitter has not fulfilled the liabilities arising from the financing contracts previously entered into with the Centre;

5.4. more than 25 % of the equity capital or voting rights of the project submitter belong to the State, local government, or State or local government capital companies;

5.5. the project submitter or foreign producer has completed filming of the relevant film on the day when the tender project is to be submitted.

[18 December 2018]

6. The co-financing shall not be granted for pornographic film projects and projects of such films which propagate religious and racial hatred, show violence without justification, or contain propaganda demeaning human dignity.

7. The support of the Centre for one co-financing project referred to in Paragraph 36 of this Regulation may be combined with aid for the same eligible costs provided in another State aid programme or individual project, in conformity with Article 8(3) and (5) of Commission Regulation No 651/2014 and without exceeding the maximum permitted aid intensity specified in Article 54(6) of the abovementioned Regulation.

[18 December 2018]

II. Preparation and Announcement of a Tender

8. The Centre shall draw up and approve the by-laws for a tender, as well as announce the tender in the official gazette Latvijas Vēstnesis, indicating the deadline for the submission of projects, the total co-financing available, as well as the place where one can become acquainted with the by-laws and receive additional information.

9. The following shall be indicated in the by-laws of the tender:

9.1. the place, deadline, and procedures for submitting a project;

9.2. the conditions for the preparation and drawing up of a project;

9.3. the documents to be submitted in addition to the documents referred to in Paragraph 12 of this Regulation;

9.4. the conditions for utilisation of the co-financing;

9.5. the amount of the co-financing which may be granted for the implementation of one project;

9.6. the positions of eligible and ineligible costs;

9.7. the deadline for implementation of the project;

9.8. the procedures and methodology for the evaluation process of projects;

9.9. other information, if necessary.

10. A project submission form and forms of other documents to be submitted shall be appended to the by-laws of the tender.

11. The by-laws of the tender shall be published on the website of the Centre after announcement of the tender.

III. Submission of Projects

12. A project submitter shall submit the following documents to the Centre:

12.1. the original of the co-production contract or of another contract entered into, or a copy certified in accordance with the procedures laid down in laws and regulations, which certifies the intent of the parties to film a film in Latvia;

12.2. a short summary of the film story (up to five pages) and a film script (in Latvian, English, or Russian);

12.3. a description of the foreign producer regarding filming plan and schedule of the film;

12.4. the activities planned in Latvia for filming the film and their calendar plan;

12.5. information regarding the foreign producer (general description, films produced during the last five years and their performance indicators, and other information at the discretion of the project submitter);

12.6. information regarding the project submitter (general description, films produced during the last five years and their performance indicators);

12.7. a total budget (cost estimate) of filming of the film project, signed by the project submitter and the relevant foreign producer, and the financing plan of the film;

12.8. the cost estimate of the use of the financing (in euros excluding VAT) according to the positions of eligible costs referred to in Paragraph 29 of this Regulation;

12.9. documents certifying the condition referred to in Sub-paragraph 5.4 of this Regulation;

12.10. the distribution plan of the film;

12.11. other documents according to the tender by-laws approved by the Centre.

[18 December 2018]

13. The project shall include a filled-in form of a project application and the documents referred to in Paragraph 12 of this Regulation. The project shall be prepared in Latvian, unless otherwise specified in the tender by-laws approved by the Centre. The film scenario shall be submitted in Latvian, English, or Russian.

[18 December 2018]

14. The project shall be submitted to the Centre in one of the following ways:

14.1. in printed form - in person or by post;

14.2. in the form of an electronic document in accordance with the laws and regulations regarding the drawing up and handling of electronic documents.

15. Upon submitting a project in printed form, its pages shall be bound together and numbered. The Centre shall determine the number of the project copies to be submitted and the requirements for the presentation thereof in the by-laws of the tender.

16. The Centre shall register the project received and assign an identification number thereto.

IV. Project Evaluation

17. A project and a project submitter shall be evaluated:

17.1. according to the evaluation criteria of administrative conformity (Annex 1) in order to ascertain whether the project submitter and the project conform to the requirements specified and should be advanced for further evaluation;

17.2. according to the project evaluation criteria (Annex 2) in order to evaluate the quality of the project in relation to the purpose of the competition, taking into account the requirements specified in Article 54(2) of Commission Regulation No 651/2014.

[18 December 2018]

18. The Centre shall evaluate the project and the project submitter according to the evaluation criteria of administrative conformity within 20 days after expiry of the deadline for the submission of projects referred to in Sub-paragraph 9.1 of this Regulation.

19. If the project or the project submitter does not conform to at least one of the conformity criteria for the project submitter referred to in Annex 1 to this Regulation, or at least one of the conformity criteria for a project referred to in Annex 1, Sub-paragraph 2.1, 2.2, or 2.5 of this Regulation, the Centre shall take a decision on non-conformity of the project with the evaluation criteria and refusal to enter into a co-financing contract.

20. If the project does not conform to the project conformity criteria referred to in Sub-paragraph 2.3 or 2.4 of Annex 1 to this Regulation, the Centre shall request in writing that the project submitter updates the project or submits additional information. The request shall be sent by post or to the electronic mail address indicated by the project submitter.

21. If the project submitter submits the updated project or the necessary additional information within 10 working days after request of the Centre in person, sends it by post, or in the form of an electronic document in accordance with the laws and regulations regarding the drawing up of electronic documents, the Centre shall re-evaluate the project according to the evaluation criteria of administrative conformity.

22. If after re-evaluation the project does not conform to any of the project evaluation criteria referred to in Paragraph 20 of this Regulation or the project submitter has not submitted the necessary additional information within 10 working days after request of the Centre, the Centre shall take a decision on non-conformity of the project with the evaluation criteria of administrative conformity and refusal to grant co-financing.

23. If the project submitter and the project conform to all the evaluation criteria of administrative conformity, evaluation of the project shall be continued by the expert committee created by the Centre (hereinafter - the committee). The agenda of the committee shall be determined in the by-laws approved by the Centre.

24. The committee has the right to invite such specialists in an advisory capacity for the evaluation of projects who have the knowledge or working skill in the film industry and who do not represent the interests of project submitters.

25. The committee shall evaluate the conformity of projects with the criteria referred to in Annex 2 to this Regulation and shall provide an opinion to the head of the Centre on entering into a co-financing contract, indicating the recommended amount of the project co-financing, or on refusal to enter into a co-financing contract, in conformity with Article 54(9) of Commission Regulation No 651/2014.

[18 December 2018]

26. In conformity with the opinion provided by the committee, the head of the Centre shall take a decision to enter into a co-financing contract or to refuse to enter into a co-financing contract. The right to enter into a co-financing contract (while there is sufficient co-financing provided for the project tender) shall be granted for the implementation of such projects which have obtained a higher evaluation according to the criteria referred to in Annex 2 to this Regulation.

27. The decision of the Centre shall be notified to the project submitter. A notification regarding the results of the project tender shall be published on the website of the Centre.

28. The Centre and the project submitter shall enter into a co-financing contract within two months after taking of the decision referred to in Paragraph 26 of this Regulation. If the co-financing contract has not been entered into within such time period due to the fault of the project submitter, the head of the Centre shall revoke a decision to enter into a co-financing contract with the project submitter and the Centre has the right to announce a new tender.

V. Eligible and Ineligible Costs

29. The production and pre-production costs meeting the following criteria are specified as eligible costs (costs to be co-financed):

29.1. they have been performed after the day of entering into a co-financing contract;

29.2. they have been utilised in Latvia;

29.3. they are directly related to the filming process;

29.4. they are directly related to the following needs:

29.4.1. costs of the administrative and professional staff necessary for the provision of filming a film, renting of equipment and services;

29.4.2. transport services and fuel;

29.4.3. construction services related to filming of a film;

29.4.4. hotel services and other services related to accommodation;

29.4.5. catering services;

29.4.6. security guard services;

29.4.7. communications services;

29.4.8. public utility services and services of public services;

29.4.9. purchase of such articles and materials which are necessary during the filming process;

29.4.10. sound processing, visual (creation of characters, animation and special effects, scenography), musical and other artistic and technological services directly related to filming a film;

29.4.11. renting or hire costs of movable and immovable property necessary for filming a film;

29.4.12. administrative services - legal, accounting and translation services, staff recruitment, except for the costs referred to in Sub-paragraph 32.2 of this Regulation for the services of a sworn auditor or a commercial company of sworn auditors;

29.4.13. fees for actors and participants in mass scenes who have participated in the making of the film.

[18 December 2018]

30. Service providers who provide services related to the costs referred to in Paragraph 29 of this Regulation must be registered in Latvia and commercial activity within the scope of the relevant film project must be carried out in the territory of Latvia.

30.¹ The Centre shall examine the incentive effect of the aid in accordance with the conditions referred to in Article 6(2) of Commission Regulation No 651/2014. If the project implementation works have been commenced prior to the submission of an aid application to the aid provider, all project costs in general shall be ineligible. The project shall be implemented once all the bodies awarding aid have taken decisions to grant aid.

[18 December 2018]

31. The following costs are determined as in eligible costs:

31.1. which do not conform to the requirements of Paragraph 29 of this Regulation;

31.2. which have not been determined in the co-financing contract entered between the Centre and the recipient of co-financing or are not necessary for implementation of filming of a film;

31.3. which the recipient of co-financing is unable to certify with the documents referred to in Paragraph 32 of this Regulation.

VI. Recognition of Eligible Costs and Disbursing of the Co-financing

32. The recipient of co-financing shall submit an application to the Centre for the disbursement of funding. The procedures for the disbursement of the co-financing shall be provided for in the tender by-laws approved by the Centre. The co-financing may be disbursed in two parts, if it is provided for in the tender by-laws. An application for the second part of the co-financing shall be submitted to the Centre within three months after the end of the filming in Latvia. The following documents certifying costs shall be appended to the application:

32.1. a report on filming of the film, indicating the payments performed in Latvia, the recipients thereof, the sums (euros excluding VAT) and dates of the payments;

32.2. a report of a sworn auditor or a commercial company of sworn auditors on payments performed during implementation of the film project in Latvia;

32.3. other documents determined according to the co-financing contract entered into.

[18 December 2018]

33. The Centre shall evaluate the documents referred to in Paragraph 32 of this Regulation within a month after receipt thereof and verify whether the costs of the co-financing conform to the eligible costs referred to in Chapter V of this Regulation, as well as the co-financing contract.

34. The Centre has the right to request and receive additional information and documents certifying expenditure in relation to implementation of the film project. For monitoring purposes, all the documentation relating to the provision of aid shall be kept for 10 years by the aid provider and the recipient of aid in accordance with Article 12 of Commission Regulation No 651/2014.

[18 December 2018]

35. After the check referred to in Paragraph 33 of this Regulation the head of the Centre shall take a decision to disburse the co-financing, determining the amount of the co-financing to be disbursed to the recipient of the co-financing, or to refuse to disburse the co-financing.

36. The amount of the co-financing shall be:

36.1. 25 % from the total sum of eligible expenditure indicated in the co-financing contract, if the principal activity of the film is taking place in Latvia or if landscape or architecture of Latvia is used in the final version of the film, including identifying indications regarding Latvia in the film;

36.2. 20 % from the total sum of eligible expenditure indicated in the co-financing contract, if identifying indications regarding Latvia are not included in the final version of the film.

[18 December 2018]

37. The part of the co-financing to be granted to the recipient of co-financing shall be determined on the basis of a report on filming of the film, documents certifying expenditures, and co-financing contract submitted by the recipient of co-the financing.

38. The head of the Centre shall take a decision to refuse to disburse the co-financing or part thereof:

38.1. if, on the basis of the documents submitted by the recipient of the co-financing and the check carried out by the Centre, it is established that the recipient of the co-financing has utilised less financial resources than the amount indicated in the co-financing contract;

38.2. if the recipient of the co-financing is unable to prove the expenditure performed;

38.3. in the cases referred to in Paragraph 31 of this Regulation.

39. The co-financing according to the amount indicated in the decision of the head of the Centre shall be transferred to the Treasury account indicated by the recipient of the co-financing within a month after taking of the relevant decision.

40. The Centre shall ensure the publicity measures provided for in Article 9(1) and (4) of Commission Regulation No 651/2014.

[18 December 2018]

41. Taking into account the period of operation of Commission Regulation No 651/2014, a decision to grant aid may be taken by 30 June 2021.

[18 December 2018]

Prime Minister V.Dombrovskis

Minister for Culture Ž. Jaunzeme-Grende

Annex 1
Cabinet Regulation No. 163
26 March 2013

1. Conformity Criteria of the Project Submitter

2. Project Conformity Criteria

Minister for Culture Ž. Jaunzeme-Grende

Annex 2
Cabinet Regulation No. 163
26 March 2013

Project Evaluation Criteria

[27 August 2013; 18 December 2018]

Minister for Culture Ž. Jaunzeme-Grende

Translation © 2019 Valsts valodas centrs (State Language Centre)