Act No 43/1999 on Temporary Reimbursements in Respect of Film Making in Iceland

Please observe that on 31 May 2016 the Icelandic Parliament extended the reimbursement legislation till end of year 2021 and increased the reimbursement rate from 20 to 25% of cost incurred. The following text has not been updated to reflect these changes.

Art. 1

Objectives. Scope.

The objective of this Act is to enhance domestic culture and promote the history and nature of Iceland by temporarily supporting motion pictures and television programmes produced in Iceland.

Art. 2

Authorisation is granted for the reimbursement from the State Treasury of a proportion of the production costs incurred in the production of films and television programmes in Iceland. In the calculation of reimbursement, the total production cost of the film or television programme shall be taken into account, regardless of which production factor causes the cost.

When more than 80% of the total production cost of a motion picture or television programme incurs in Iceland, the reimbursement shall be calculated from the total production cost incurring within the European Economic Area.

Production costs refers to all costs incurred in Iceland deductible from the revenues of enterprises pursuant to the provisions of the Act on Income and Net Wealth Tax. Payments pertaining to employees and contractors are only to be included in production costs if they are verifiably taxable in Iceland

Art. 3

Application for reimbursement of production costs shall be submitted to the Ministry. The application, with enclosures, shall be submitted before production commences in Iceland. A special committee of three members shall review applications and submit recommendations to the Minister for decision. The Minister shall appoint the committee, and the Minister responsible for motion pictures and the Minister responsible for State treasury and financial affairs shall each nominate one member, while the third shall be appointed without nomination to serve as chairman of the committee. Alternates shall be appointed in the same manner. In case of even votes, the Chairman has the deciding vote.

Art. 4

In assessing whether a proportion of the production costs of a motion picture or television programme shall be reimbursed, the following conditions shall be fulfilled:

a. the production shall be suited for disseminating Icelandic culture, promoting the history or nature of the country, or the production shall be suited to promoting increased experience, knowledge and artistic ambitions of the parties involved.;


c. a specific company shall be established in Iceland for the production; an Icelandic branch or agency of a company registered in another Member State of the European Economic Area shall be considered a specific company;

d. information on the principal parties involved in the film or television programme shall be made available;

e. information on domestic parties and their share in the production of the film or television programme shall be made available;

f. an itemised estimate of the production costs and sources of funding shall be made available, together with confirmation by the funding parties and a declaration by the applicant to the effect that the production conforms to the aims of the Act;

g. information about the content of the proposed production of a motion picture or a television programme shall be made available, such as a script and information about filming locations;

h. information should be available regarding the arrangements of general distribution.;

i. the subject matter of the film or television programming should not violate the provisions of law relating to film inspection and the ban on violent films, nor the provisions of the General Penal Code concerning pornography.

j. there shall be no unpaid state or municipal taxes or public levies in Iceland relating to the production.
In the event of a change in estimated production costs (cf. paragraph 1, item f) after production begins, a new cost estimate shall be submitted to the Ministry.

When assessing an application for reimbursement, the Committee established pursuant to Article 3 shall have the authority to procure an expert opinion regarding the conditions for the reimbursement.

Advertisement and news material, short films, recordings of sports events and entertainment events, material which is primarily intended for the promotion of specific goods or services and material intended primarily for showing in own distribution networks, shall not qualify for reimbursement pursuant to this Act. In the event that the production of a motion picture or television programme is not completed within three years from the date of approval of reimbursement granted pursuant to Article 3, the approval shall lapse. In special circumstances the committee on reimbursements provided for in Article 3 may grant exemptions from this condition for a maximum period of five years from the date of approval

Art. 5

The proportion of reimbursed production costs shall be 20% of the production cost pursuant to Art. 2.

A request for disbursement shall be sent to the Ministry of Industry. If the request is received after six months have passed from the end of the production of a motion picture or television programme, the request shall be denied. The Minister of Industry shall determine the reimbursement based on recommendation of the Committee pursuant to Art. 3. It is a condition for reimbursement that the applicant keep records of the costs he wishes to be reimbursed for in accordance with the Act on Accounting and the Act on Annual Accounts. Production cost comprises all cost that may be deducted from income generated by business operations pursuant to the Act on income tax and which is incurred in Iceland and, as applicable, in another state party to the Agreement on the European Economic Area, cf. the second paragraph of Article 2 of this Act. Furthermore, the board of directors and managing director of the applicant shall confirm that the cost settlement is in compliance with this Act and regulations issued hereunder. If the reimbursement is an amount in excess of ISK 20 million, the cost settlement shall also be audited.

For the purpose of verifying the cost settlement, the committee appointed pursuant to Article 3 may request the appropriate information from the tax authorities and the accounts of the company. If the cost settlement and/or its attached documents are inadequate, the committee shall set the applicant a time limit to supply adequate documents. If the committee has not received adequate documents when the time limit has passed, or if the documents of the case indicate that the cost settlement does not comply with the provisions of this Act, the committee shall submit to the Minister a recommendation to reject the request for reimbursement.

Art. 6

In the event that an applicant has received a grant from public entities for the production of the same motion picture or television programme, the grant shall be deducted from the amount that is considered domestic production cost. The aggregate grant from public entities and the total amount of reimbursement pursuant to Article 5 shall not exceed 85% of the total production cost of the same film or television programming.

Art. 7

The Minister shall issue a regulation on the implementation of this Act. It shall, i.a., contain provisions on procedures for reimbursements as stipulated in this Act, the right of the Minister to defer reimbursements in excess of the amount allocated in the Government budget, conditions for reimbursements, applications, responses to applications and decisions on reimbursements.

Art. 8

On 31 December 2016 Act No. 43/1999 on temporary reimbursements in respect of film making in Iceland, as amended, shall be repealed. However, applications for reimbursement that have been approved before that time shall remain in effect.

Transitional Provisions

Applicants who have been granted approvals of reimbursement prior to the entry into force of this act are entitled to apply again for reimbursement of production cost after the reimbursement proportion has been increased. However, this shall apply only if production has not yet begun.