Quotas and levies

Media law & regulation > Quotas and levies

Quotas and levies

This section is still under construction.
Numbers in square brackets after entries link to the list of references.

ARGENTINA

Screen quota
A quota was introduced in June 2004 to protect local production, requiring all exhibitors to show at least one local film in each quarter year for each screen. Thus a 16-screen multiplex must show 64 Argentinean films a year. Films may also not be changed midweek, nor taken off if attendance falls to between six and 25 per cent of capacity. Much of the exhibition sector is foreign-owned.

AUSTRALIA

Screen quota
A quota was introduced in the state of Victoria around 1927, requiring cinemas to screen at least 1,000 ft (one reel) of Australian production in each programme. This was easily met by including a cheap travelogue or newsreel. The Royal Commission that sat from June 1927 to February 1928 proposed establishing a quota for Australian and Empire productions but no legislation followed, at least partly out of deference to American distributors and Australian exhibitors, which opposed a quota. Australian production plummeted in 1929.
A quota was introduced nationally in 1935.

AUSTRIA

Screen quota
A quota was introduced on 3 September 1926 to run for two years. For every Austrian film released, distributors could be granted licences for 20 imported films. The licences are tradable. From 1 January 1927 the quota is reduced to 10 imports to one Austrian film but is retroactively increased to 18:1 in October and returned to 20:1 on 1 January 1928. On 5 December 1928 the quota is increased to 23:1, retrospectively from 1 January.

BRAZIL

A quota of one short Brazilian film for each long foreign film was introduced in 1932. The US-Brazil Commercial Treaty of 1935 mandated that there must be no quotas that would penalise foreign (ie, American) films. However, following the establishment of the Estado Novo in 1937 under the dictatorship of Getulio Vargas, a quota was enacted in 1939 requiring every cinema to show Brazilian films for at least one week a year. In 1945 the new government of General Eurico Dutra increased the quota to three weeks a year, ironically at a time when there was more direct inward investment from the USA into the Brazilian film industry.
This was subsequently changed so that cinemas must show Brazilian films for a minimum number of days a year, although there has generally been no enforcement. In 1970 the quota was doubled from 56 to a crippling 112 days a year. It later reached a high of 180 days. In 1998 the quota was increased from 35 days to 49 days. The current quota in 2004 is 63 days.

DENMARK

A film fund is created under the revised film law of 1938. Exhibitors pay a levy based on profits, varying between 20 per cent and 65 per cent. Producers must maintain output of at least three films of good quality a year.
A decree of 25 November 1949 gave exhibitors a 25 per cent rebate on Entertainments Tax in respect of earnings from Danish films. The rate of tax was 60 per cent, so screenings of Danish films attracted a 15 per cent subsidy. No quota has ever been imposed because of the domestic popularity of Danish films.

FINLAND

Screen quota
Finland has never applied a screen quota.

FRANCE

Centre Nationale de la Cinématographie (CNC) was formed in 1946. It was responsible for administering the Temporary Assistance Law that came into force in September 1948 and established the Fonds d'Aide.

Screen quota
A scheme was introduced on 12 March 1928 granting import licences to exporters of French films, but this was replaced on 1 May by a quota requiring distributors to offer one French film for every seven imported films.
On 27 February 1929, France's Chambre Syndicale decided to change the import quota from a ratio of seven imports for each French film to three. The Motion Picture Producers and Distributors Association (MPPDA) refused to negotiate, preferring to implement a high tariff—a strategy that would favour its members over all others without giving French films an entrée to the US market. On 10 April the MPPDA imposed a boycott on exporting films to France.
In the Blum-Byrnes agreement of May 1946 (see Import restrictions below), a quota of four weeks of French films per quarter was established. This was increased to five weeks in the September 1948 agreement.

Dubbing
Only films dubbed in France were permitted from 29 July 1932. At the same time, the number of cinemas in which foreign-language films can be shown is limited. On 24 July 1933, a quota for dubbed films in the year to 30 June 1934 is set at 140, followed by a limit of 94 films in the following six months to the end of 1934.

Production subsidies
Temporary support was introduced in September 1948 based on an additional tax on ticket sales. Producers received subsidies from the resultant Fonds d'aide in proportion to their films' box office receipts but the money had to be invested in further production. As foreign receipts counted double, there was an added incentive to produce films with export potential. Exhibitors could also apply for funds to upgrade their cinemas. Producers could also receive loans from Crédit National for up to 30 per cent of costs. About 22 per cent of film costs came from this source in the first year, when a total of 45 per cent of production investment came from public sources.

Fond d'Aide disbursements to 1 April 1951

paid to	Ffr
feature film producers	2,489,931,184
short film producers	96,751,919
newsreel producers	180,000,000
Unifrance (promotion agency)	48,000,000
exhibitors	1,241,105,010
administrative expenses	24,507,851
total	4,080,295,764

Import restrictions
In October 1920 France raised the tariff on American film imports to 20 per cent in response to US proposals (the Forducy Tariff Bill) to raise US tariffs on imports.
In May 1946 a Franco-American agreement (the 'Blum-Byrnes' agreement) established terms of trade, including a screen quota (see above). Another declaration on motion pictures was signed on 16 September 1948 with the Motion Picture Export Association of America (MPEAA). In June 1960, the French government signed a pact with the MPEAA to relax, but not remove, the limitation on the number of US films allowed into France, retrospective to July 1959. Until now a core of only 110 import licences has been permitted, with only minor exemptions.

GERMANY

Import restrictions
In 1916, at the height of the First World War, Germany banned imports of films from all countries except Denmark. [Why Denmark?]

Screen quota
On 1 January 1921 a quota was introduced to run for four years, allowing imports equivalent to 15 per cent of the total footage of negative produced in Germany in 1919. On its expiry, it was replaced as from 1 January 1925 by a new quota of one imported feature for every German production.
        A Kontingent scheme was announced in November 1927 based on specific numbers of films that the market would support. For 1 April 1928-30 June 1929 the number for German importers was set at 170, with another 90 held in reserve. The quota was revised on 13 December 1928, reducing the overall number to 210 for the year from 1 July 1929 to 30 June 1930. This arrangement was extended on 1 February 1929 for another year, but 160 licences were to be allocated to German distributors in proportion to the number of German films they had released in 1928/29, the remaining 50 licences going to exporters of German films.
        In July 1930 the Kontingent quota specified that two thirds of of the 210 licences should go to silent films (in practice: 129 silent, 90 sound issued in 1930/31). Again, the arrangement was extended for a year from 1 July 1931 (in practice: 70 silent, 105 sound issued in 1931/32).
        From 1 July 1932 a requirement was introduced that dubbing of sound films should be carried out in Germany and that only 50 per cent of imports could be dubbed.

HUNGARY

Screen quota
A quota was introduced in 1925. Any film distributor releasing 20 or more films in one year must produce (at least) one Hungarian film. The following year the ratio was changes to one Hungarian film for every 30 imports. From 1 January 1928, distributors were given the option of releasing one Hungarian film for every 20 imported or pay a hefty import duty on each foreign film. This arrangement was abandoned on 1 October 1930 in favour of fixed fees for any number of imports.

ITALY

Screen quota
In 1925 a quota required all cinemas to screen an all-Italian programme for one week in every two months (ie, a ratio of 1:8, 12½ per cent). The revised quota of Italian films for 10 per cent of screen time introduced on 1 October 1927 was not enforced because of insufficient films to meet the quota. From 24 August 1928, films imported from countries that in turn import Italian films are themselves classed as Italian.
A law introduced in 1933 required Italian cinemas to screen one Italian film for every three foreign films.

A screen quota was re-introduced in December 1949. All cinemas were required to show Italian films for at least 80 days a year (ie, approximately 22 per cent) or 20 days a quarter, including two Sundays. Exhibitors were able to claim back 20 per cent of the Entertainment Tax for Italian films they screened. (The tax was 15 per cent on cheap seats, rising to 50 per cent at the top of the range, averaging around 25 per cent.
In 1956 the exhibition quota was increased to 100 days a year (ie, approximately 28 per cent).

Production subsidies
Under the regulations introduced on 29 December 1949, producers received a subsidy of 10 per cent of the gross box office revenue earned by their films for a period of five years, plus an additional eight per cent in the case of films deemed to be of artistic merit by a quota council, which vetted every film for eligibility for the subsidy. The money comes from taxes on film dubbing licences (see below).

Import restrictions
Italy passed the Andreotti Act to tax film imports to support local production on 26 July 1949. Named after Giulio Andreotti (later an Italian prime minister), the Act required the distributor of a dubbed imported film to deposit 2.5m Lire (around $4,000) in the state banking agency Banca Nazionale del Lavoro, the funds thus created being made available as loans for Italian film production at low interest rates. After 10 years the distributor could redeem the 'dubbing certificate' issued in return for the deposit—in effect a compulsory interest-free loan. The Italian government traded dubbing licences with other countries where similar restrictions apply.

In May 1951 Italy reached agreement with the Motion Picture Export Association of America (MPEA) that eight US companies would be allowed to import 225 films a year and Italian distributors will be allowed to import 60 American films a year, all dubbed into Italian. The eight US companies are Columbia, MGM, Paramount, Republic, RKO, Twentieth Century-Fox, United Artists and Universal. The agreement was to run for two years but was extended from 31 August 1954. The new agreement cut the number of American dubbed film imports to 190 from the majors and 55 from independents. A further cut was made in 1959, the number of American films that could be imported from MPEA majors falling to 185 a year. Restrictions on American imports were lifted completely in 1962.

Levy
On 18 June 1931 a levy of 10 per cent of box office revenue is imposed on Italian cinemas by Law 918, the funds to be used to ‘aid all sectors of the film industry and in particular to reward those with a proven ability to cater for the tastes of the public’.

KOREA

Screen quota
A quota was introduced around 1967 and currently (2002) requires cinemas to screen Korean films for 146 days a year. The US is seeking to have the quota reduced or abolished as part of a bilateral investment treaty currently being negotiated. Korean film-makers and actors are lobbying to retain the quota, especially as the industry has become more successful in its home market and with growing exports.

MEXICO

Screen quota
The 1992 Federal Film Law reduced the screen quota, introduced by the only previous film legislation in 1949, from 50 per cent to zero over four years. A new Federal Film Law passed in 1997 re-introduced a 10 per cent quota, rather than the 30 per cent wanted by producers.

Dubbing
Under the 1949 Federal Film Law, foreign films may not be dubbed into Spanish. Despite American pressure, this was retained in the 1997 law.

PORTUGAL

Screen quota
A quota was introduced on 6 May 1927 requiring each cinema programme to include at least one reel (1,000ft, 300m) of Portuguese production

SOUTH AFRICA

Entertainments tax
An Entertainments Tax was introduced in 1956

SPAIN

Screen quota
In 1955 the Spanish government wanted to replace the agreement with the Motion Picture Export Association of America (MPEA) with a new one that would reduce the number of US films that distributors could import from 100 to 80 a year, of which 68 could be dubbed, the other 12 subtitled. It also wanted MPEA members to distribute Spanish films in the USA in return. The latter in particular was unacceptable to Hollywood interests and a boycott was imposed by the MPEA.

The Cinema Law of 1994 changed the screen quota for exhibitors from one day of EU films for every two days of non-EU films to one day for every three days, brought into effect in January 1997. The regulations established a three-tiered system for dubbing licenses to be phased out in 1999.
In 1998 a decree under its law on language policy was adopted by the regional government in Catalonia to impose both dubbing and screen quotas to increase the production and screening of Catalan-language films.

UNITED KINGDOM

Import duty
In 1916 import duty was imposed for positive film prints at 1d (0.42p) a foot and for negative at 5d (2.1p). Imports of blank (unexposed film stock were taxed at 0.33d (0.14p) per linear foot.

Screen quotas 1928-1975
Established under the Cinematograph Films Act 1927. In that year the UK generated $165m box office revenue and produced 44 films (4.8 per cent of films shown), against 723 US film imports (81 per cent). The UK provided 30 per cent of US film export earnings for the year.

Quota based on proportion of screen time during accounting period (ie, days per year)

	Quota for exhibitors	Quota for renters (distributors)	Legislation

1928 April 1		7½ per cent	Cinematograph Films Act 1927
1928 October 1	5 per cent
	rising steadily to	rising steadily to
1935	20 per cent	20 per cent
1942 October	planned rise abandoned because of war conditions	planned rise abandoned because of war conditions
1947 October	25 per cent (long and short films)	30 per cent (long and short films)
1948 October	45 per cent (long films), 25 per cent (supporting programme)	abolished	Cinematograph Films Act 1948* SI 1948/ 1687; Cinematograph Films (Quotas) Order.
1949 September	40 per cent (long films)
1950 September	30 per cent (long films)		SI 1950/531 Cinematograph Films (Quotas) (Amendment) Order.
1982 January	15 per cent (long films and supporting programme)
1983 January 1	suspended
1985	abolished		Films Act 1985

*Repealed and replaced by Films Act 1960.
SI Statutory Instrument

In 1949 the effect of exemptions was to reduce the effective overall average quota to 33.6 per cent; in practice the screen time achieved was 30.4 per cent.

Entertainments Tax
See separate page

Eady Levy
In late 1949 a scheme was proposed by Harold Wilson, the President of the Board of Trade, to provide a form of subsidy to producers of British films that would not be regarded as a subsidy under the terms of the General Agreement of Tariffs and Trade (GATT)—to which American film interests would certainly have objected—and to reduce the effect of Entertainments tax on film exhibition, to which all the cinema industry was opposed.

The solution was a levy, named after Treasury official Sir Wilfrid Eady, in which a proportion of the ticket price was to be pooled—half to be retained by exhibitors (ie, effectively a rebate on the tax) and half to be divided among qualifying 'British' films in proportion to UK box office revenue, with no obligation to invest in further production. The Finance Bill 1950 made the changes in the Entertainments tax.

The levy was collected by HM Customs & Excise and administered by the British Film Fund Agency.

	duration	levy rate	additional distribution of funds	legislation
1950	1 year	all seats: ¼d	5 per cent to Children's Film Foundation (CFF)
1951	3 years	seats at 3d-1s:¼d seats over 1s: ¾d (ie ¼d + ½d)	£100,000-£125,000 a year to CFF 1956/57 only: £5,500 to British Film Institute (BFI)
1957	10 years	under 10d: exempt 10d-1s1d: ¼d 1s1½d-1s2½d: ½d 1s3d-1s4d: ¾d 1s4½d-1s5½d: 1d 1s6d-1s7½d: 1¼d 1s8d-1s9½d: 1½d over 1s9½d: 1¾d	£125,000 a year to CFF	Cinematograph Films Act 1957 puts the levy on a statutory basis
1960	indefinite	1/9th of amount exceeding 11d	varying amount to CFF
1968		1/9th of amount exceeding 1s6d (7½d)	from 1970: payments to BFI and National Film School>
1973		net of Value Added Tax (VAT)	from 1975: payments to National Film Finance Corporation (NFFC) for National Film Development Fund
1977		1/9th of amount exceeding 12½p
1978		1/9th of amount exceeding 17½p
1979		1/12th of any ticket price
1985		abolished		Films Act 1985

National Film Finance Corporation
Plans for a National Film Finance Corporation (NFFC) to make production loans were proposed in July 1948. The Cinematograph Film Production (Special Loans) Act 1949 was passed to ‘make temporary provision for lending of money to be employed in financing the production or distribution’ of films. The loans at commercial rates from the Board of Trade were to be made available pending the completion of arrangements to set up the National Film Finance Corporation, the first chairman of which was Lord Reith, former founding director-general of the BBC.

Sources: The chronology of European Quota Regulations from Kristin Thompson: Exporting Entertainment: America in the World film market 1907-1934 has been drawn on for the period 1921-1934. [0041]

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Page updated 18 November 2005