The Italian government will this week announce major changes to its film and TV tax credit system aimed at boosting local productions and producers and ensuring more Italian stories get told on screen. The changes come after a year of uncertainty that has left many productions in limbo.

Under the new rules, international co-productions will face an €18 million ($19.7 million) cap on tax credit payouts for projects where at least 30 percent of the production is made in Italy. Local productions will be capped at €9 million ($10 million). The overall fund for film and audiovisual investments in 2024 remains unchanged at approximately €700 million ($782 million).

The change is designed to boost Italian TV and movies and encourage visiting international productions to focus more on Italian stories, like Michael Mann’s Ferrari, about the life of the legendary car designer, starring Adam Driver and Penelope Cruz, which premiered at last year’s Venice Film Festival, or Ridley Scott’s House of Gucci, on the Italian fashion legends, starring Driver and Lady Gaga.

A separate international production tax credit, which benefits visiting productions that shoot in Italy, and helped the likes of HBO’s The White Lotus, pick Sicily as its location for season 2, is still making its way through the Italian parliament. The core of that reform is a 30 percent tax credit, rising to 40 percent for Italian talent.

The past 12 months have been one of stalemate in the Italian industry. Many Italian productions had stopped shooting while they waited to see the level of tax credit they could attract after the culture ministry, under the government of Prime Minister Giorgia Meloni, called for an overall of the system.

Industry unions have criticized the government’s proposals after the text of the new reforms was published.

“It’s hard to find strengths of this reform,” notes Andrea Paris, producer at Groenlandia/Ascent, who worked, amongst other things, on Sydney Sibilia’s Smetto quando voglio trilogy. He notes that uncertainty about the reforms has brought production to a standstill, leaving thousands of industry workers without a job since the start of the year. “Small and medium-sized companies are slowly asphyxiating to death,” he says.

Nicola Giuliano, producer and co-founder of Indigo Film, which produced Paolo Sorrentino’s Oscar-winner The Great Beauty, acknowledges the current system has been exploited by some of his colleagues, “who have exploited the situation to become rich. I can’t oppose this intent to reduce funding. Those who use the tax credit improperly, for their personal gain, put the entire sector and those who work in it at risk.”

But Giuliano sees problems with Rome’s reforms. “Producers are being asked to declare [before production] exactly how many screens their film will be released on. This is not something a producer can know.”

The Italian film and TV industry has been enjoying a boom of late, with hit local features such as Matteo Garrone’s Oscar-nominated Io Capitano and surprise box office smash There’s Still Tomorrow from Paola Cortellesi. International companies are investing in Italian features, with the likes of Fremantle, through their Italian production subsidiaries Lux Vide, The Apartment, and Wildside backing such productions as Pablo Larraín’s Maria, starring Angelina Jolie, and Queer from Luca Guadagnino with Daniel Craig.

The streamers have invested more in Italian content too, see The Good Mothers from Disney+ or Netflix’s Supersex. Italy is also co-producing with more countries: Anica and APA research recently cited a 51 percent increase in the number of films and TV series made with international producers. Locally, however, the Italian box office has yet to recover to its pre-pandemic levels. Audience figures are still 23 percent below the 2017-19 period. The box-office success of There’s Still Tomorrow still remains very much the exception.

It was during the COVID pandemic that the Italian government boosted its production tax credit from 30 percent to 40 percent in an (successful) effort to bring in international productions. But the tax credit’s very success has led to concerns it was being misused, with many tax-credit-backed productions struggling to reach an audience.

Roberto Stabile, head of special projects, Directorate General for Cinema and Audiovisual-Ministry of Culture at Rome-based studio Cinecitta, stresses that the tax credit was raised during the pandemic to bolster the industry and has been a success. “Two years after the long pandemic period, the health of our audiovisual industry is very good,” he says. “But these kinds of support risk becoming like a drug for the market.”

Carlo Cresto-Dina, a producer and CEO of Tempesta, which produces Alice Rohrwacher’s features, adds that it is important to recognize how successful the tax credit has been in strengthening the Italian industry while acknowledging that reform is needed.

“I am convinced we should find a way to give qualified access to the tax credit to ensure public money is spent on films that are then seen and enjoyed,” Cresto-Dina says.