When the City of Light hosted First in 2005, there were no tax incentives for national or international productions. The finance ministry had not yet introduced reforms; it would only come in 2014. A 15% refund on investments for foreign films with a 2.5 million euro limit existed, along with a 20% subsidy on Spanish productions with a 3 million euro cap.
Starting from scratch and reaching these levels was a major milestone, yet it still fell short. In the same year, European peers offered more generous terms: France, Germany, and Italy provided up to 40% in incentives; Great Britain offered up to 25%; Ireland up to 28%. Spanish figures were not competitive by comparison.
Although the simplest route would have been to align the law with the rest of Europe, a move Valencian authorities pursued independently aimed to place their productions on equal footing with Europe’s strongest teams. Initially, productions did not surge because there were no incentives or because subsidies were limited and fixed.
This marked the beginning of a pivotal shift. Public investments totaled 470 million, with over 22 million euros allocated to 66 filming facilities between 2005 and 2012. Although the Generalitat operated outside national rules, an annual provision was approved for the purchase of film projects. In 2011, this amount stood at 2.4 million euros, the same figure as in 2012.
That year, the European Commission ruled that the assistance provided by the Generalitat for the construction of the Ciudad de la Luz complex and the post-shoot subsidies were incompatible and illegal. British studios like Pinewood described the regime as unfair competition.
City of Light: turn black
What is clear is that the incentives granted by the Generalitat to both domestic and foreign productions were offered without clear regulation. This absence of oversight contributed to the closure of the studios in 2012, until July 1, when they reopened after the Commission lifted the penalty and the Generalitat reclaimed the space for filmmaking activities.
Fiscal Policy Turnaround
Since then, the complex’s fortunes and its fiscal policy have evolved. A new government in 2020 introduced a 30% tax credit, with 25% available for withdrawals up to the first million euros and the remainder of eligible expenditure in Spain, capped at 10 million euros. Some regions outside Valencia, like the Canary Islands, Basque Country, and Navarra, have their own regimes, but Valencia’s framework remains national in scope.
That fiscal reform positioned Spain, and Ciudad de la Luz, more prominently on the international stage. Data from the international association of audio-visual producers show that in 2022 Germany and the United Kingdom offered around 25% incentives, while several countries such as France, Austria, Hungary, Croatia, Italy, and Portugal provide around 30%. Spain’s own 30% incentive aligns with many peers and supports continued attraction of projects.
Brussels lifts City of Light restrictions and Consell regains full control
This shift in incentives reflects a broader trend: film investment in Spain rose from 130 million euros between 2016 and 2019 to over 263 million in 2021, with production timelines spanning a few weeks to nine months or more, depending on projects. The Alicante complex adds value by offering enhanced tax incentives and a unique technical capacity in climate and production quality, a combination sought by many foreign crews.
Looking ahead five years, the President of the Generalitat, Ximo Puig, envisions Alicante as a hub hosting roughly 220 productions with substantial economic impact, potentially reaching 850 million euros. Realizing this goal will require earlier investments, including around 2.4 million euros to modernize and commission facilities, particularly to create a unique water‑ditch environment in Europe.
Film Commission Valencia Community continues to identify shooting locations, with streams of inquiries for studio openings as streaming platforms fuel demand for content. The return of Ciudad de la Luz could address the current shortage of sets for Spain’s growing audiovisual industry and become a practical solution for international productions.
Tax incentives in European countries for international film shooting *
GERMANY: 25% with a maximum return of 25 million euros.
AUSTRIA: 30% with a maximum return of 7.5 million euros.
BELGIUM: 42% Tax Shelter with a refund cap of 15 million Euros.
CYPRUS: 25-35% with an upper income limit of 25 million Euros.
CROATIA: 30% with an upper limit of 8 million euros.
SPAIN: 30% with a return limit of 10 million euros.
FINLAND: 25% with a maximum return of 12.35 million euros.
FRANCE: 30% up to 40% for productions with significant visual effects (VFX) and a maximum return of 30 million euros.
GREECE: 40% with a maximum return of 75 million euros per year.
HOLLAND: 35% with a maximum annual return of 19.25 million euros.
HUNGARY: 30% with a maximum return of 90 million euros.
IRELAND: 37% tax credit up to 70 million euros.
ICELAND: 25% with no refund limit.
ITALY: 30% with a maximum return of 25 million euros.
LITHUANIA: 30% with a maximum return of 50 million euros.
MALTA: 30-35%, no refund limit.
NORWAY: 25%, with a maximum return of 6.4 million euros.
POLAND: 30% 45 million euros per year.
PORTUGAL: 30% with an annual cap of 12 million euros.
England: 25% tax credit with no refund limit.
CZECH REPUBLIC: 20% with a limit of 30 million Euros per year.
ROMANIA: 35% with a return cap of 10 million Euros per project.
SERBIA: 30% with a maximum return of 7 million euros per year.
*Font: Profilm Comparison of tax incentives in Europe (PROFILM)