The New Film Funding Act has come into force!

As of January 1, 2025, the new Film Funding Act (“FFG”) has come into force. Since the collection of the film levy, which finances film funding, ended under the old FFG on December 31, 2024, a timely reform of the FFG was necessary. The new FFG continues the collection of the film levy for five years and comprehensively reforms film funding. We highlight the most significant changes.

Extensive Automation of Production and Distribution Funding

A major change in film funding under the new FFG is the elimination of selective project film funding on the one hand and project funding for distribution and sales companies on the other hand. The regulations regarding the composition and procedures of the funding commissions are also removed in the new FFG. The old funding instruments involved evaluative funding decisions by funding commissions based on an "overall assessments." Processing the associated funding applications by the German Federal Film Board (“FFA”) was time-consuming, especially the preparation of the film projects for the commissions and of the necessary documentation and forms. Project film funding was designed as top-tier funding with a minimum funding amount of EUR 200,000.

The new FFG fully transitions production and distribution funding to an automatic reference-based system. This makes film funding significantly more predictable and transparent for applicants and rewards those involved in the economic and cultural success of a film even more. Financial resources freed up from the previous project film funding will benefit reference film funding. With the threshold for participation in production funding lowered to 25,000 points per reference film, the FFA predicts that 42 more full-length reference films will qualify for production funding than before. Additionally, funding assistance will now also be granted to the directors and screenwriters of the reference film.

Clear Structures – German Federal Film Board becomes central Institution for Federal Film Funding

The organization of film funding under the FFG is now clearer than before. Starting in 2025, all federal film funding will be consolidated and managed under the FFA. The FFA will also take over the tasks of the Federal Government's film and media funding, including jury-based film funding financed by taxes and other media funding, such as in the area of games. The FFA will remain responsible for handling script development funding, even though this will be transferred to the tax-financed federal film funding under the reform.

The new FFG equips the FFA with comprehensive regulatory competence in line with its new role in film funding, thereby strengthening the FFA's self-governing autonomy. This allows the FFA to respond more flexibly and quickly to technological developments and changing market conditions. For example, it can establish additional funding requirements through guidelines and independently determine the festivals and awards that qualify for reference points. Specific references to awards (such as the Oscars) or festivals (such as the Berlin, Cannes, or Venice Film Festivals) are absent in the new FFG.

Further Changes

Change from Cinema Funding to partially Automated Project Funding 

The new FFG changes from cinema funding to a partially automated project funding model. The reference-based cinema funding is eliminated in the new FFG. Funding is granted when the funding requirements are met and funding is available. The final evaluative funding decision by the relevant funding commission is no longer required. Under the new FFG, individuals who have not previously operated a cinema are also eligible to apply, provided they intend to operate a cinema in Germany.

Cinema-Based Calculation of the Film Levy

Under the new FFG, the FFA calculates the film levy based on cinemas (not on screens anymore). The film levy is calculated based on the annual net revenue of a cinema as a whole. Cinema operators are exempt from the film levy if the net revenue per cinema does not exceed EUR 150,000 annually. By raising the threshold from EUR 100,000 to EUR 150,000, the legislature further protects operators of lower-revenue cinemas.

Unchanged Aspects

No Elimination of Media Services

Television broadcasters remain entitled to replace part of their contributions to film funding with media services in the form of advertising time for cinema films. However, the maximum percentage of media services for obligated contributors is significantly reduced from 40 percent to 15 percent. The initial draft of the new FFG had proposed eliminating media services altogether. Additionally, under the new FFG, video-on-demand services are also entitled to provide media services. This acknowledges the growing importance of video-on-demand services and their substantial reach.

No Establishment of a Diversity Advisory Board

Contrary to previous plans, the new FFG does not include provisions for establishing a Diversity Advisory Board. The board was intended to advise the FFA on issues related to diversity, gender equality, inclusion, and anti-discrimination and was to be involved by the FFA in a timely manner on these issues, but without directly or indirectly influencing artistic decisions. The federal parliament´s Committee on Cultural Affairs removed these provisions from the draft law a day before the third (final) reading in the federal parliament to secure the necessary majority for the law.

Conclusion

With the reform of the FFG, the legislature makes film funding more transparent and predictable for eligible applicants and significantly strengthens the competencies and powers of the FFA. Nevertheless, the FFG reform remains only one component of the Federal Government's announced comprehensive film funding reform. The tax incentive model and an investment obligation for streamers and media library providers did not make it through the legislative process before the end of the current legislative period. It remains to be seen whether and to what extent the legal status quo, with which the film industry will start in 2025, will change after the federal elections in February.