Film Production Guide

Film Production Guide

Content 01 Introduction 2 02 Bosnia and Herzegovina 3 03 Croatia 6 04 Macedonia 9 05 Montenegro 12 06 Serbia 16 07 Slovenia 19 08 Regional Film 22 Production Summary 09 Our Network 24

01 Introduction Our Guide to Film Production is designed to answer some of the most common questions we get from our clients in this field. It is designed to provide a short overview of the advantages of film production and post production and the challenges faced by international production companies in our part of the world. The Balkan region with its seemingly endless fields, mountains, lakes, beaches and old towns, bore witness to the changing European landscape throughout history. The film industry in the former Yugoslavia was of global importance with companies such as Jadran Film and Avala film heavily involved in foreign film production. As a result, there were generations of reputable directors and producers hailing from our region that have worked internationally at the highest standard. Today, there is a new generation eager to reap the benefits of local geography, culture and skilled labour, a generation that is ready to re-build the region s allure for this industry. There has been a huge increase in film production in a number of countries and in this guide we examine why that is and what makes those countries attractive. This Guide highlights the main issues facing international and local producers and assists in understanding the complex system of tax credits, rebates and incentives offered by many countries in the region as a way to attract more investment in this field. Our regional legal practice advises on strategic and legal representation in the establishing companies, obtaining all the various permits and regulatory approvals, in negotiations with local production and service companies, as well as film financing assistance and documentation work. We advise clients on how to prevent disputes, which is always better, but we also advise on local court and arbitration proceedings when they arise. Finally, no film is complete without an international staff, and we help with work and residence permits, tax and customs procedures for the equipment, as well as with other tailored legal services as clients need them. With over 160 specialised service providers in 6 markets our aim is to provide a fully integrated service so that clients can focus on what they do best making films. We hope this information is useful for you and if you have questions please contact us at entertainment@karanovic-nikolic.com 2

02 Bosnia & Herzegovina Why Film in Bosnia and Herzegovina? Bosnia and Herzegovina is a heart shaped country that lies in the middle of South East Europe. It is here that eastern and western civilizations met, and enriched the country in a unique way by combining different cultural and religious elements. Sarajevo, the capital city, boasts a cityscape which combines modern buildings, centuries-old Ottoman mosques and Austro-Hungarian inspired architecture. The diversity which is reflected in Bosnia and Herzegovina s cities can also be observed in the spectacular landscape which includes one of Europe s last remaining primeval forests, Olympic ski slopes, stunning waterfalls, and much more, making the country an excellent film-making destination. There are a number of local production companies, some of which have already attained significant experience in working on reputable international projects. In 2015 alone, a total of 51 films were produced in Bosnia and Herzegovina, including two feature films. Some Bosnian and Herzegovinian films have proven to be great success stories, being presented at many acclaimed international film festivals (inclluding Cannes and Berlin) and have earned many key film awards worldwide including a Golden Bear in Berlin (Grbavica by Jasmila Žbanić) and an Oscar (No Man s Land by Danis Tanović). The central government s power is highly limited, as the country is largely decentralised and comprises two autonomous entities: the Federation of Bosnia and Herzegovina and the Republic of Srpska, with a third region, the Brčko District, governed under local authorities. The Federation of Bosnia and Herzegovina is itself quite complex and consists of 10 federal units cantons. The country is attractive to filmmakers due to low production costs and its competitive labour force, best illustrated by the fact that the average net salary in 2016 was approximately EUR 430, while the minimum salary was approximately EUR 205. The VAT is set at 17% for all sales of goods and services. Personal and corporate income tax are regulated on the entity level (the Federation of Bosnia and Herzegovina and the Republic of Srpska) and are set at 10% along with double taxation treaties with dozens of countries worldwide. The country maintains a high rate of literacy, life expectancy and education levels and is one of the most frequently visited countries in the region, projected to have the third highest tourism growth rate in the world between 1995 and 2020. Q1. Any Funding? Funds in Bosnia and Hercegovina Due to the structure of Bosnia and Hercegovina, funding for movie production is regulated at the entity and cantonal level. In general, potential candidates who wish to apply for funding have to go through a tender procedure where additional information and documentation has to be submitted under the relevant rules. Details on these procedures, the relevant documentation and other additional advice are available upon request. Official name of country Population GDP in EUR (per capita) Film suporting institutions (public) Public funding available in EUR Average production budget EUR Unfortunately, under the current regulation, the applicable laws in both entities do not foresee any special incentives for film production (i.e. cash rebates or tax incentives). This matter has yet to be further developed in order to attract foreign production companies to the country. Funds in the Republic of Srpska The government of the Republic of Srpska has adopted a number of updated and relevant laws which aim to promote and strengthen the movie industry in this entity. The Ministry of Education and Culture, as the competent body, is the one providing financial aid. The Ministry can fund feature films, short films, documentaries, animations, and alternative (experimental) films. Financial aid is based on the allocation of the entity s budget, and due to the economic crisis, it has been declining in recent years. The allocation in 2015/2016 was approximately EUR 50,000. Funds from the Ministry of Education and Culture are granted in the form of subsidies by means of a public tendering procedure. Funds in the Federation of Bosnia and Herzegovina The Government of Federation of Bosnia and Herzegovina established the Film Fund in 2002 and since then the Fund has been operating within the Ministry of Culture and Sport of the Federation of Bosnia and Herzegovina in order to provide financial support for the development of cinema in Bosnia and Herzegovina. The Fund s major objective is to stimulate, develop and improve creativity, entrepreneurship and production in filmmaking within the Federation of Bosnia and Herzegovina and to support the organisation of film events, etc. In 2016, the overall budget of the Film Fund was approximately EUR 880,000. As in the Republic of Srpska entity, finds are granted in the form of subsidies by means of a public tendering procedure. BOSNIA AND HERZEGOVINA 3,867,395 3,915 Film Fund Sarajevo, Ministry of Culture of Republic Srpska, Ministry of Culture and Sports of Kanton Sarajevo approx. 1,000,000 750,000 all information in the table provided by Sarajevo Film Festival 02 BOSNIA & HERZEGOVINA

Q2. Who Will Support Me? Cultural activities are mainly regulated in the Federation of Bosnia and Herzegovina at the cantonal level, meaning that every canton in the Federation has its own competence to support and boost the film industry. The Association of Filmmakers of the Federation of Bosnia and Herzegovina has an important role in the development of Bosnian and Herzegovinian cinema, developing strategies and connecting with the government, and also promoting Bosnian and Herzegovinian cinema abroad. The Association of the Federation of Filmmakers of Bosnia and Herzegovina is a professional association, established in accordance with the Law on Associations and Foundations of the Federation which gathers professional filmmakers. Although regulated by the Law on Cinematography in the Republic of Srpska, a Centre for Film in the Republic of Srpska has not yet been established. However, Bosnia and Herzegovina offers one of the most important promotional platforms in the region, the Sarajevo Film Festival. During the 15 years since its launch, the Sarajevo Film Festival has become a major hub for South Eastern Europe s film professionals, and has played a crucial role in the expansion of cinematic co-production in the region. It has also become a key destination for professionals from across Europe who are in search of talent and co-production possibilities, or who simply wish to obtain in-depth knowledge about production opportunities in this dynamic region. Q3. A License to Film? In order to film at a specific location, producers need to obtain adequate location permits. Depending on the location, such permits are obtained from the competent Ministry of Culture (of the Republic of Srpska or of the relevant canton in the Federation), relevant municipalities, and private owners (i.e. natural persons or legal entities) if filming is to take place on private property. The governing bodies or private owners have the right to ask for adequate remuneration for their participation in the filming process. Q4. A License to Film? Visas are not required in case of business or tourist stays that are up to 90 days for citizens of EU countries, the United States, and some South-American and Asian countries. However, foreign nationals intending to work in Bosnia and Hercegovina or to reside in Bosnia and Hercegovina for longer than 90 days within a 6 month period, must obtain a temporary residence permit. The Law on Foreigners of BiH, the Law on Employment of Foreigners in the Federation Bosnia and Herzegovina, Law on Employment of Foreign Citizens and Stateless Persons of Republic of Srpska and the Law on Employment of Foreigners of Brčko District regulate foreign citizens residing and working in the country. The work and temporary residence of foreign film workers is regulated depending on the duration of the stay in Bosnia and Herzegovina, according to the following distinctions: - Stay up to 90 days: Foreign film workers can work in Bosnia and Herzegovina without a work permit if they do not stay for more than 90 days within a calendar year. Such individuals do require a certificate of work Office for Foreigners Affairs. - Stay for more than 90 days: Foreign film workers must obtain a work and residency permit in order to stay in the country for more than 90 days. The issuance of a work permit or an employment permit is strictly limited by quotas for certain categories of foreign workers. The annual quota is determined by the Council of Ministers of BiH in accordance with the migration policy and the situation in the labor market. Work permits specified in the annual quota by activities and professions shall be issued first for the purpose of extending the already issued work permits, and then for new employment. One should note that the procedure of regulating the work and residence permits for foreigners is somewhat complicated and requires submission of extensive documentation and could last several months. Q5. Can we bring our own Equipment? Bosnian and Herzegovinian customs legislation is not yet fully harmonised with relevant EU legislation, meaning that Bosnia and Herzegovina has yet to finalise procedures to ratify its participation in the EU s 2020 customs and fiscal program. In general, non-commercial items intended for personal use are exempt from customs duties and VAT, but professional equipment must be reported to customs officials. Foreign citizens can enter Bosnia and Herzegovina with up to EUR 5000 without notifying customs officials. If the amount of cash or checks exceeds EUR 5000, the foreigner must report it to the officials. 4

Sector specific regulations allow for the temporary admission of certain goods into the territory of BiH. This means that imported goods for the purpose of filming can be partially or fully relieved from customs duties if such goods will be re-exported within 24 months of important and remain in the same condition aside from normal depreciation due to regular use. Bosnia and Herzegovina is a signatory party to the Convention on Temporary Admission from 26 June 1990, which allows nationals of other signatory countries to use the benefits of ATA Carnet. This international document replaces national customs documents and regular procedures for the temporary import of goods, including customs duties. The validity of this document cannot exceed one year. Q6. Do I Have to Establish a Local Company? Having some form of direct local presence or a production partner is required under local rules in order to qualify for funding. Consequently, foreign film productions and filmmakers that are interested in setting up their business in Bosnia and Herzegovina have the option to establish themselves either directly through a local entity or indirectly in cooperation with a local production company. Setting up a business in Bosnia and Herzegovina depends on the needs and plans of the foreign investor, as the establishment of a company is regulated on the entity level. The decision of where to set up a company in order to produce a film in Bosnia and Herzegovina has an impact on access to funding since some funding mechanisms require funds to be spent in a particular entity of the country. Nevertheless, streamlined cooperation can be expected due to the fact that many of local production companies already have experience in working with international productions. In case the foreign production or entertainment investor decides to establish a local company of their own, the first choice would usually be a limited liability company (LLC). The minimal capital required in this case is EUR 1,000 in the Federation of Bosnia and Herzegovina or EUR 0.50 in the Republic of Srpska and it may consist of money or in kind contributions (e.g. equipment, goods, know-how etc.). Alternatively, a branch office can be set up in either entity, and will be considered as an organisational part of the parent company. Therefore, all contracts concluded by the branch office with third parties will be considered as contracts concluded by the founder, with the founder being fully liable for the branch s obligations. Finally, certain productions may opt to establish a representative office. While local companies or branches of foreign companies can undertake business activities in Bosnia and Herzegovina, note that representative offices are usually established for conducting marketing and promotional activities only. Q7. Anything Else? Locations The Association of Filmmakers in BiH has published a location guide for Bosnia and Herzegovina presenting the four geographical regions where most of the filmmaking in the past ten years has taken place. These regions are centered around four cities: Banja Luka, Mostar, Goražde and Sarajevo. Culture Bosnia and Herzegovina s colourful past is evident in its centuries-old architectural marvels, art scene and cuisine. Modern-day Bosnia and Herzegovina is a product of an interesting cultural, political, and social story. It started with the emergence of Illyrian civilizations, which evolved into the Bosnian Kingdom. The kingdom eventually became an annexation of the Ottoman Empire and later, the Austro Hungarian Monarchy. Long years of war followed, from WWI to the Yugoslav wars in the 1990 s. The diversity and cultural exchange is also evident in social norms, religious and cultural festivities, music, art, and cuisine. Climate In terms of climate, Bosnia and Herzegovina has a moderate continental climate, marked by hot summers and cold, snowy winters. The Herzegovina region in the south of the country, has more of a Mediterranean climate. Business BiH offers opportunities to well-prepared and persistent exporters and investors. The country is open to foreign investment, offers a liberal trade regime, and is richly endowed with natural resources. Many projects stem from the involvement and support of development banks, the World Bank, the European Union, and other international donors. The Business Excellence Area represents a development initiative between the Municipalities of Teslic, Tesanj and Zepce, and was ranked as Top 10 of the Southern European Regions in the category of best European investment locations in terms of cost efficiency in a recent competition of European cities and regions in 2014/15. Transportation Four international airports operate in Bosnia and Herzegovina (Sarajevo, Banja Luka, Mostar and Tuzla). Bosnia and Herzegovina is also connected by rail with Croatia, Montenegro and Serbia, while roads lead to Croatia, Serbia and Montenegro. Credits Bosnia & Herzegovina has been credited as the location for a number of major international productions such as The Whistleblower, The Hunting Party, No Man s Land, Twice Born, just to name a few. 02 BOSNIA & HERZEGOVINA

03 Croatia Why Film in Croatia? Croatia, as the newest member of the European Union, may be small in size, but has a lot to offer the filmmaking industry. It has natural, unspoiled beauty with remarkable locations of different varieties, including 6,278 km of coastline with 1,244 islands. Croatia also has proven local talents, a vibrant film industry and a number of production companies with an exceptional record in the international filmmaking industry and at international film festivals. Located in the heart of South Eastern Europe, it is easily accessible by land from other important filmmaking centers such as Vienna, Budapest, Munich and Prague, as well as by air or water from a dozen of other major international cities. Croatian incentives for the production of film and television programs in the form of cash rebates, competitive prices and flexible teams ensure that filming on location in Croatia is cost effective and smoothly organised. This has been confirmed by successful cooperation with the producers of highly popular productions, including Game of Thrones and Star Wars, which have been filmed in different locations in Croatia, mostly on the Adriatic coast. Quality of services, low production costs and a very professional and competitive labor force makes Croatia is attractive to filmmakers. The average gross salary in 2016 is approximately EUR 1000, while the minimum gross salary is EUR 400. The VAT is set at 25% for all sales of goods and services, including imports, except for sales and import which is taxed at a lower preferential rate of 13% (e.g. for hotels and catering). 6 Q1. Any Incentives? 20% Cash Rebate The Production Incentive Programme, which has been available since 2012, is financed by the Croatian state budget and is granted by the Croatian Audio Visual Centre. Following Croatia s EU accession, the European Commission prolonged the incentive program until the end of 2019. An applicant for the rebate can be an entity registered in Croatia (or a Croatian branch of a foreign entity) and must: produce the feature film, animated film, documentary or television drama/series entirely or at least partially in Croatia and must hold the role of producer, co-producer or be a production service company to the film; hold the script copyright; present evidence that within three years preceding the application, the applicant has produced at least one feature film or television piece that was commercially distributed in cinemas, on television or at least one international film/television festival; and present an estimate of the completed overall production budget. Producers of feature films, animated films, documentaries, TV drama and TV series are eligible to receive the rebate, provided that the pieces are intended for public broadcast and distribution, while commercials, reality TV, game shows, and soap operas are excluded from the rebate program. The rebate program is administered on a first-come first serve basis, and the rebates are paid directly to the applicant s Croatian bank account, amounting to 20% of all Official name of country Population GDP in EUR (per capita) Film suporting institutions (public) Public funding available in EUR Average production budget EUR qualified costs, excluding VAT. These costs include the costs of the Croatian film crew and the cost of goods and services incurred in Croatia. The applicant should secure at least 70% of the costs that will be used for production in Croatia, and the production crew should be made up of at least 30-50% Croatian (EEA) citizens. Also, certain minimum costs must be incurred in order for the rebate to be granted. They amount to EUR 250,000 for feature films, EUR 40,000 for documentaries and approximately EUR 70,000 for animated films. Rebates are given in the maximum amount of EUR 500,000, unless the total costs exceed EUR 2.5 million, in which case producers may apply for an increased rebate. In exceptional cases, a maximum of 80% of the overall budget may be co-financed with state aid, however, in general, the incentive sums from the Croatian state aid and other member countries of the European Economic Area do not exceed 50% of the overall budget of the audio-visual piece,or 60% in case of cross-border co-productions financed by at least two EU member states. The complete application must be submitted to the Croatian Audio Visual Centre at least 30 days prior to the start of principal photography. The piece must pass a qualification test and acquire 12 out of 34 points in order to qualify. The qualification test assesses the cultural value of the piece and contribution of the Croatian production and human resources throughout the entire filming project. All kinds of production services may be supported in Croatia, including location scouting, scheduling, budgeting, casting and crew. Apart from this production incentive, a film project with international partners can also benefit from the selective Minority Republic of Croatia 4,225,300 10,162.00 Croatian Audiovisual Centre, City of Zagreb, City of Rijeka, City of Split 9 million EUR 1 milion EUR all information in the table provided by Sarajevo Film Festival

Co-production Scheme that provides funding for projects originating outside of Croatia but with Croatian participation. The Croatian Audio Visual Centre publishes a call with four annual submission deadlines for films which may qualify as official co-productions, either under bilateral treaties or the European Convention on Cinematographic Co-production. Q2. Who Will Support Me? The Law on Audio-visual Activities 1, the Law on Copyright and Related Rights 2 and accompanying secondary legislation regulate film production Croatia. The Law on Audio-visual Activities sets out the general framework for encouraging cinematography, the manner of exercising public interest in cinema, and other issues of importance for performing cinematographic activities, whereas the Law on Copyright and Related Rights covers all the questions related to rights of authorship and related rights such as the rights of performers. The Croatian Audio Visual Centre (HAVC) 3 acts as a first stop service for all key questions that a foreign production company may have about filming in Croatia. Q3. Location Permits? Special permits are not required to film in Croatia, but producers are required to register the shooting with the Croatian Audio visual Centre by filing a standardised filming registration form. Also, in order to film at a specific location, producers need to obtain adequate location permits. For any type of location in Croatia, be it public roads, bridges, streets, national parks, protected monuments and structures, and other, specific permits need to be obtained prior to shooting. Depending on the location, such permits are obtained from relevant municipalities, road companies, national parks, various state and city institutes for the protection of monuments and cultural heritage, and private owners (i.e. natural persons or legal entities) should the filming take place on private property. Q4. What About My Crew? Foreign nationals of EU member countries, EEA, as well as United States, Australia and Canada, do not need to obtain visas for business or tourist stays that are up to 90 days within a 6 months period. However, foreign nationals intending to work or reside in Croatia for longer than 90 days within a 6 month period must obtain a temporary residence and work permit. The permit is issued by the Croatian Ministry of Internal Affairs and enables a foreign national to leave and return to Croatia without restriction. There are certain exceptions to this rule, including the case of foreigners who reside in Croatia for less than 60 days within a calendar year and who personally perform temporary artistic, culture or other similar activities, as well as persons who perform accompanying technical or organisational activities. Such individuals are only required to obtain a work application certificate. The procedure of obtaining a temporary residency and work permit usually takes between one to two months. The Law on Foreigners 4 regulates the stay and permitting requirements for foreign nationals involved in film production in Croatia. Additionally, a taxpayer who earns revenue in Croatia may pay personal income tax in another country and be exempt from taxes in Croatia provided there is a Double Taxation Treaty with his/her country of residence. Q5. Can We Bring Our Own Equipment? Croatian customs legislation is harmonised almost entirely with relevant EU legislation. Non-commercial items in the value of approx. EUR 5,000 per individual in sea and air traffic, and EUR 3,000 in other means of transportation, intended for personal use are exempt from customs duties and VAT. However, professional equipment and devices have to be reported to customs officials. Foreign citizens can enter Croatia with EUR 10,000 without notifying customs officials. If the amount of cash or checks exceeds EUR 10,000, the foreigner must report it to customs officials. Sector specific regulations allow for the temporary admission of certain goods into the territory of Croatia. This means that imported goods for the purpose of filming can be partially or fully relieved from customs duties if such goods are re-exportated within 24 months of import and have remained in the same condition, aside from normal depreciation due to regular use. Croatia is a signatory party to the Convention on Temporary Admission from 26 June 1990, which allows nationals of other signatory countries to use the benefits of ATA Carnet. This international document replaces the national customs documents and regular procedures for the temporary import of goods, including the customs duties thus enabling free transport of equipment without additional costs or paperwork. The validity of this document cannot exceed one year. Film production companies are also eligible for VAT refunds for locally purchased and rented equipment, for amounts in excess of approximately EUR 100. Foreign nationals must claim this tax refund within six months of the receipt issue date. 1 Official Gazette of the Republic of Croatia nos. 76/2007 and 90/2011. 2 Official Gazette of the Republic of Croatia nos. 167/2003, 79/2007, 125/2011, 80/2011, 141/2013 and 127/2014. 3 Croatian Audio Visual Centre website: http://www.havc.hr/eng/ 4 Published in the Official Gazette of the Republic of Croatia no. 97/2008. 03 CROATIA

Q6. Do I Have to Establish a Local Company? Having some form of direct local presence or a local production partner is required in order to qualify for the Government awarded cash rebate in Croatia. Foreign film productions and filmmakers that are interested in setting up their business in Croatia have the option to establish themselves either directly through a local entity or indirectly in cooperation with a local production company. Many successful projects have already been implemented in the country based on smooth cooperation between an international production company and Croatian producers. In case the foreign production or entertainment investor decides to establish a local entity of their own, the most straightforward choice is to establish a limited liability company (LLC), or a branch office. Alternatively, a representative office can also be established for specific purpose. An LLC is by far the most common corporate form present in Croatia. The minimum share capital required for registration is approximately EUR 3,000, and may partially be contributed in kind through equipment, goods, know-how, etc. Setting up a branch office is also possible but is subject to limitations. A branch office does not have the status of a separate legal entity and is considered to be an organisational part of the parent company, acting in its name and for its account. Therefore, all contracts concluded by the branch office with third parties will be considered as contracts concluded by the parent company which remails fully liable for the branch s obligations. The founders of the branch office are not legally required to contribute any monetary or in-kind contributions. Alternatively, legal entities from countries that are not members of the EU or EEA can set up a representative office. However, a representative office does not have the status of a separate legal entity and is considered as an organisational part of the foreign company with the purpose of representation on the Croatian market. As such, it is usually set up to conduct logistical support for the foreign company and the investigation of the market in Croatia, performing only preliminary and preparatory work in connection with the conclusion of contracts in Croatia. Q7. Anything Else? Locations and infrastructure Croatia offers a wide range of diverse architectural, cultural and natural locations. From beautiful costal landscapes to rural areas with remote villages, from urban city landscapes to forest and mountain ranges, and all of it located near the heart of Europe. With thousands of beautiful islands, fortresses and medieval castles, Croatia can accommodate a wide spectre of artistic expressions. Climate Croatia s climate is mild continental climate with inland cold snowy winters and hot dry summers. Spring and fall, with their tremendous expressions in the nature, tend to provide filmmakers with magnificent photography opportunities. Transportation The main form of transportation is via air, although Croatia is easily accessile by land and sea as well. International air traffic goes through seven airports - Zagreb, Zadar, Split, Dubrovnik, Rijeka, Osijek and Pula. Maritime traffic goes through the ports of Rijeka, Ploče, Split, Zadar, Dubrovnik, Hvar and Korčula. Croatia s railway system offers direct connections with Slovenia, Hungary, Italy, Austria, Switzerland, Germany, Bosnia and Herzegovina and Serbia, as well as transfer connections with almost all other European countries. Croatia also has over 1,400 km of motorways connecting the capital Zagreb to the rest of the country. Credits In recent years, Croatia has been credited as a prime location for major international productions such as Game of Thrones and Star Wars, as well as several television series such as Borgia, Christmas in the Sun, Jonathan Strange & Mr Norrell and Dig, have all been produced in the country in the past two years alone. 8

04 Macedonia Why Film in Macedonia? Macedonia is a country at the cross-road between cultures and nations in the Balkans. A variety of spectacular landscapes, ranging from untouched nature to picturesque villages and cities, offer endless possibilities for developing a film project. The beautiful mountains, rivers, lakes, waterfalls and churches have been an inspiration for many artists and film-makers in the past, and we expect this trend to grow in the coming years. There are a number of local production companies, including those offering visual effects and CGI/VFX post production services, some of which have already attained significant experience in working on reputable international projects. Due to low production costs and a very competitive labour force, Macedonia is attractive to filmmakers from a multitude of angles. To better contextualise this fact, it should be noted that the average gross salary in 2016 was EUR 500, while the minimum salary was EUR 160. VAT is set at 18% for all sales of goods and services, including imports, except for sales and import which is taxed at a preferential rate of 5% (e.g. for hotel and catering). Personal and corporate income tax are set at 10% along with very favourable double taxation treaties with dozens of countries worldwide (some of them providing 0% withholding tax). Low social security contributions for employees amount to only 27% of gross salaries. Q1. Any Incentives? 20% Cash Rebate The Macedonian Film Agency ( MFA ) offers incentives for both foreign and domestic producers that intend to film in Macedonia. After the wrap-up of a feature film, documentary, animation, television film or television series, producers are eligible for a cash rebate of the invested funds for the film/television project. The refund can cover up to 20% of the eligible expenditures made in Macedonia for the making of the film and is granted only after meeting certain conditions. In order to qualify for the 20% cash rebate refund, the foreign production must enter into a co-production agreement, or an agreement for certain production services with a Macedonian production company. Furthermore, the Macedonian production company in question must have: (i) at least one produced or co-produced and publically displayed feature film; and (ii) invested at least EUR 100,000 in the designated film/ television project, excluding funds obtained from other state support budgets. Eligible expenses include goods and services purchased in Macedonia, as well as wages paid to local tax residents (both cast and crew) for services carried out in Macedonia. The cash rebate is paid upon completion of production, and the submission of audited accounting reports and evidence that all legal requirements have been met. Several production companies have already received cash rebates under this new regime. Additional Incentives The MFA can also fund feature films, short films, documentaries or animations that are proven to be of national interest for Macedonia. The financial aid in these cases is determined in accordance with the following, previously established thresholds: Official name of country Population GDP in EUR (per capita) Film suporting institutions (public) Public funding available in EUR Average production budget EUR a The MFA can fund up to 70% of the film s budget, provided that the financial aid does not exceed EUR 1,000,000; b The MFA can participate in the funding of a debut film with up to 90% of the film s budget, provided that the financial aid does not exceed EUR 400,000; c The MFA can fund film projects of national interest with up to 90% of the film s budget, providing no limitation regarding the total amount of the financial aid. These thresholds depend on several other conditions which must be fulfilled. At least 65% of the awarded funds have to be spent in Macedonia and the MFA reserves the right to a portion of the net profit of the film in the amount of 50% of the awarded financial aid, in addition to the condition of the foreign producer must enter into a co-production agreement with a Macedonian production company. It should be noted that additional requirements under relevant local rules also apply. Details on these procedures, the relevant documentation and other additional advice are available upon request. Q2. Who Will Support Me? The Film Industry Law 1 and accompanying secondary legislation regulates the film industry in Macedonia. The Film Industry Law was the first to introduce different concepts for improving the film industry and culture in the country by offering incentives to filmmakers, and establishing reliable institutional infrastructure responsible for achieving the planned goals. Focused on the support and growth of the film industry, the Macedonian Film Agency ( MFA ) has a key role in enforcing the sector specific regulation and in helping Republic of Macedonia 2,02 million 4,357.00 Macedonian Film Agency 7,000,000 approx. 5.000.000 ₁ Published in the Official Gazette of the Republic of Macedonia nos. 82/2013, 18/2014, 44/2014, 129/2015, 152/2015 and 39/2016. all information in the table provided by Sarajevo Film Festival ₂ An administrative body in the scope of the Ministry of Culture, authorized to manage the cultural heritage of Macedonia and all related issues regarding its exploitation. 04 MACEDONIA

producers to carry out their film projects. The MFA assists during the whole process of implementation of a film/television project, from its financing to promotion. The MFA also promotes Macedonian films and co-productions at all major film festivals and markets and administers the Macedonian Film Production incentive programme, aimed to encourage and stimulate investments in film/television projects. Depending on the needs of international filmmakers, the MFA provides support with respect to the communication with local companies and authorities, obtaining location permits, fulfilling the legal requirements for shooting and securing financial support. The MFA s annual budget for supporting cinematography in 2015 was EUR 6 million. The Ministry of Culture is in charge of conducting cultural policy and the implementation of cinematography strategies in the country. The Ministry is also actively involved in and supports more significant film projects filmed in Macedonia, assisting with the communication with its internal bodies and authorities that are responsible for awarding filming permits on specific locations (e.g. the Administration of Cultural Heritage 2, theatres and other public cultural venues, intragovernmental coordination, etc.). Q3. A License to Film? Producers must obtain a location permit to film in Macedonia. Depending on the location, such permits are obtained from the Administration of Cultural Heritage, relevant municipalities, or private owners (i.e. natural persons or legal entities) if filming is to take place on private property. For filming in certain locations such as public roads, squares and urban areas, producers need to consult the Ministry of Interior and obtain relevant permits from the police. Filming in forests and natural parks is subject to permits issued by relevant public authorities. Governing bodies or private owners have to right to ask for adequate remuneration for their participation in the filming process. Q4. What About my Crew? Foreign citizens need to have a visa for entering Macedonia. However, it is important to point out that no visa is required in case of business or tourist stays that are up to 90 days long for the citizens of US and EU. Stays for a period of time longer than 90 days require the issuance of an appropriate visa. The procedures involved in obtaining visas, work and residency permits for foreigners involve submission of extensive documentation and could last between 3 to 4 months. The Law on Work and Employment of Foreigners 3 regulates the stay and work engagement requirements of foreign citizens in Macedonia. No working permit is required for foreigners who are filming on a temporary basis. The requirements for work and temporary residency of foreign film workers depends on their duration of the stay in Macedonia, according to the following distinctions: Stay up to 7 days: Filmmakers need to obtain an approval of their stay from the Ministry of Culture and register their work at the Employment Agency. Foreign filmmakers cannot work in Macedonia on this basis for more than 30 days per year. Stay up to 90 days: Based on an agreement with a Macedonian legal entity (e.g. local production company), foreign workers can obtain a work permit in Macedonia, as well as a temporary residence permit on the grounds of individual provision of services to a local entity. In exceptional cases, including issuance of work permits for cultural workers, the work permit in such cases can be issued for a period of up to one year; Stay for more than 90 days, up to 1 year: Foreign film workers have to obtain an employment permit and be employed at a local Macedonian company in order to carry out professional activities. The issuance of a work permit or an employment permit is strictly limited by quotas for certain categories of foreign workers that are adopted by the Macedonian Government annually. Foreign film workers can obtain a work/employment permit as long as: (i) the annual quota has not been filled, and (ii) there is no adequate substitute Macedonian worker in the records of the Employment Agency that could perform the respective work. ₃ Published in the Official Gazette of the Republic of Macedonia nos. 82/2013, 18/2014 and 44/2014. 10

Q5. Can We Bring Our Own Equipment? Macedonian customs legislation is harmonised to a great extent with the relevant EU legislation. Non-commercial items intended for personal use are exempt from customs duties and VAT, but professional equipment and devices have to be reported to customs officials. Foreign citizens can enter Macedonia with EUR 10,000 without notifying the customs officials. If the amount of cash or checks exceeds EUR 10,000, the foreigner must report it to the officials. The sector specific regulation allows for a temporary admission of certain goods on the territory of Macedonia. This means that the imported goods for the purpose of filming can be partially or fully relieved from customs duties if such goods are either intended for re-export within a specified period or have not undergone any changes, aside from normal depreciation due to regular use. The goods subject of temporary admission procedure must be exported in a specific period which cannot be longer than 24 months. Macedonia is a signatory party to the Convention on Temporary Admission from 26 June 1990, which allows nationals of other signatory countries to use the benefits of ATA Carnet. This international document replaces the national customs documents and regular procedures for the temporary import of goods, including the customs duties. The validity of this document cannot exceed one year. Q6. Do I Have to Establish a Local Company? As already seen, having a local company or a production partner can be required under local rules (e.g. in order to apply and receive incentives). Foreign film productions and filmmakers that are interested in setting up their business in Macedonia have the option to establish a local entity or cooperate with local productions. The most convenient way of setting up the business in Macedonia depends on the needs and plans of the foreign investor, however, most opt to work with local production companies. In case the foreign production or entertainment investor decides to establish a local entity of their own, the first choice would usually be a limited liability company (LLC). The minimal capital required in this case is EUR 5,000 and it may consist of money or in kind (e.g. equipment, goods, know-how etc.). Alternatively, a branch office can be set up, and it will be considered as an organisational part of the parent company. Therefore, all contracts concluded by the branch office with third parties will be considered as contracts concluded by the founder, with the founder being fully liable for the branch s obligations. The founders of the branch office are not legally required to contribute any monetary or in-kind contribution. Finally, setting up a representative office is also an option for those who find it to suit their needs. However, it should be taken into consideration that while a foreign company can act and undertake business activities in Macedonia via its branch, this cannot be the case through an established representative office, since they are usually used for marketing and promotion purposes only. Q7. Anything Else? Culture and Climate There are over 1,000 churches and monasteries in Macedonia, most of them several centuries old, making the country one of the most attractive destinations for cultural tourism in the region. The Mediterranean climate makes the location even more attractive, as 280 sunny days per year make the filming easy for most of filmmakers needs. Business Macedonia has cut down the costs and time for registration of a business and has improved business environment significantly over the past years. According to the World Bank Group, Macedonia ranks second best in the world for ease of starting a business. Registration procedures of a new company can be completed within a day, while the flat tax rate at 10% is one of the lowest in Europe. Transportation Two international airports operate in Macedonia, one in the capital of Skopje (23 km from the city centre) and one in Ohrid (10km from the city centre). Skopje is connected 34 destinations in Europe and the Middle East via direct flights. Macedonia is also connected by train with Serbia and Greece, while roads lead to Albania, Bulgaria, Greece, Kosovo and Serbia. Thessaloniki port in Greece is 60km from Macedonian border and approximately 200km from the capital Skopje. Credits Macedonia has been featured as the location for major international productions such as 12 Monkeys (TV Show), The Peacemaker, An Idiot Abroad (TV Show), Welcome to Sarajevo, Ulysses Gaze, just to name a few. 04 MACEDONIA

05 Montenegro Montenegro, the youngest country in Europe, gained its independence in 2006. It has inherited a part of the Yugoslavian legacy in film making, having hosted Sylvester Stallone, Sophia Loren, Nicholas Lyndhurst, Brad Pitt and Angelina Jolie. Aside from its filmmaking legacy, modern day Montenegro offers an accommodating climate, the beautiful Adriatic Sea and many breath-taking landscapes and beaches. Montenegro is a small Mediterranean country with a rich architectural and cultural heritage, diverse landscapes and climates, and a well-preserved natural environment. Situated in the heart of the Balkans, with access to sea, it is easily accessible by land, air or water from a dozen major international cities and ports. Naturally well-suited for the development of all kinds of tourism, Montenegro has focused its recent economic development efforts on becoming an elite tourist destination. Montenegro is considered to be one of the Europe s fastest-growing tourist destinations. In 2007, over a million tourists visited Montenegro, amounting to some 7.3 million overnight stays (23% increase, compared to 2006). This accounted for some EUR 480 million in tourism revenue in 2007 (39% increase, compared to previous year). In 2015 tourism realised 1.5 million arrivals. ₁ Published in the Official Gazette of Montenegro, no. 42/2015. 12 Due to quality services, low production costs and a very professional and competitive labour force, Montenegro is attractive to filmmakers for many reasons. The average gross salary in 2016 was EUR 500, while the minimum salary was EUR 190, making film production in Montenegro cost efficient. The VAT is set at 19% for all sales of goods and services, including imports, except for sales and import which is taxed at a preferential rate of 7% (e.g. for hotels and catering). Personal and corporate income tax are set at 9%, along with very favourable double taxation treaties with dozens of countries worldwide (some of them providing 0% withholding tax). Low social security contributions for employees amount to only 34% of gross salaries. Q1. Any Incentives? 20% Cash Rebate The Montenegrin Film Centre ( MFC ) offers incentives for both foreign and domestic producers that intend to film in Montenegro. After the wrap-up of a feature film, documentary, animation, television film or television series, the producer has the possibility to get a cash rebate of the invested funds for the film/television project. The refund can cover up to 20% of eligible expenditures spent in Montenegro for the making of the film and is granted after meeting certain conditions. The right to a cash rebate may be granted to the producer of a cinematographic work, a co-producer or production company that performs a service, provided that: Official name of country Population GDP in EUR (per capita) Film suporting institutions (public) Public funding available in EUR Average production budget EUR 1 the funds spent for the realisation of a cinematographic work in Montenegro are not provided from the budget of Montenegro or the MFC and are not less than EUR 100,000; 2 all taxes, contributions and other fiscal obligations prescribed by law have been previously settled in Montenegro; 3 there are no bankruptcy or liquidation proceedings against the producer; and 4 a producer or co-producer has at least one feature film that was shown to the public. The funds intended for the cash rebate are provided from the budget of Montenegrin Government but do not have the qualities of a refund in terms of tax regulations. Rather, cash rebates for the film industry are paid out in accordance with the rules on state aid. The right to a cash rebate for a part of the funds spent in film production can be acquired by a producer for the production of live-action, animated and documentary films, television films and series, which are fully or partially produced in Montenegro and which are intended for public presentation. The producer may be entitled to a rebate of 20% of the total production cost of the cinematographic work in Montenegro, excluding VAT. The cash rebate is paid upon completion of production and the submission of audited accounting reports and evidence that all legal requirements have been met. The cash rebate system has already been put into practice with rebates having already been received by several producers. Montenegro 620.029 6.45 Ministry Culture of Montenegro 420.00 n/a all information in the table provided by Sarajevo Film Festival