Brexit Deadline Looms as Questions Remain Over Movement of People and Equipment
With the Brexit deadline looming on Dec. 31, film and TV production remains largely in the dark about how businesses can operate between Britain and the European Union.
When Britain formally left the E.U. on Jan. 31 this year, a transition period running until the end of 2020 took effect, during which trade negotiations were meant to be finalized.
But with less than a month to go, the U.K. and E.U. are still talking, and there is little sign of compromise on two key sticking points which are holding up a deal: state aid rules and fishing rights.
A wary sense of frustration has now set in within U.K. film and TV, which acknowledges that — deal or no deal — Brexit will lead to greater red tape and costs. Despite this, industry leaders agree that the U.K.’s booming content industries will be able to overcome the challenges posed by Brexit.
“I think we’re all resigned now to a no deal Brexit,” says Lyndsay Duthie, CEO of the Production Guild of Great Britain. “But even in the event we were to get a deal, it would likely be such a hard leave that, frankly, the challenges our members would face is almost exactly the same.”
John McVay, chief executive of producers’ trade org Pact, says the “day-to-day nuts and bolts of making film and TV programs won’t be that adversely affected” provided that talent can move between countries in a “not too burdensome way.”
The U.K. industry, he says, wants an arrangement that is “straightforward, plannable and easy to navigate.” He points out that this is in the best interests of both the E.U. and the U.K., as many E.U. countries benefit from both British and British-qualifying U.S. productions spending money on shoots in Europe.
MOVEMENT OF PEOPLE AND EQUIPMENT
For film and TV production, the biggest question marks remain around the movement of people and kit between Britain and Europe.
Currently, U.K. citizens can work in Europe without a work permit, and vice versa. This has meant that British crew employed on an international production like “Game of Thrones” could easily travel with the series around Europe to shooting locations such as Spain or Croatia.
However, new rules for providing services and travelling for business to the E.U., Switzerland, Norway, Iceland and Liechtenstein apply from Jan. 1, 2021.
It’s still unclear what exactly these rules will be. As part of the trade negotiations with the E.U., the U.K. government is seeking a reciprocal agreement that could allow U.K. citizens to undertake some business activities in the EU without a work permit, on a short-term basis.
Without an agreement, it may mean British crew will have to get a work permit to shoot in Europe.
Similarly, the movement of goods — including filming equipment — between Britain and Europe is still subject to negotiation. Without an agreement, it may mean productions require a carnet, or a special customs permission, to temporarily move kit between countries for shoots.
The need for work permits and carnets would not be beyond the logistical capacity of the U.K. industry to sort out, says Pact’s McVay. “But it’s another administrative burden, it’s another cost.”
Productions also may need to arrange health insurance for crew in place of the current European Health Insurance cards. New tariffs may also apply to using phones and data in the E.U.
“The key takeaway is that producers planning to shoot in the E.U. will need to be much more organized and prepared so they don’t get caught out by the wide range of new rules which affect taking people and equipment to the E.U.,” says Clare McGarry, an associate at legal firm Harbottle & Lewis.
For U.K. companies looking to hire European talent on a permanent basis, there will also be new rules, according to the BFI’s Brexit briefing document. The government is introducing an Australian style points-based immigration system that would be introduced from Jan. 2021, which will treat European and non-European nationals equally.
Those moving to the U.K. for permanent employment, such as many VFX roles, must have a job offer in a high-skilled profession and must be able to speak English. They must then reach a ‘points’ threshold via a combination of salary level (which must always be above £20,480 [$27,350]), level of qualification and whether they are working in an occupation with recognized skills shortages.
Employers in the screen sectors will be required to pay an immigration skills charge as well as a National Health Service (NHS) surcharge to bring these workers in.
Neil Hatton, CEO of the U.K. Screen Alliance, which represents the VFX and animation sectors, estimates that these charges will add in the region of £2,000 ($2,670) for each European recruit. “I don’t think it is going to stop us employing experienced European talent,” he says. “But, on the whole, employers will think twice about hiring entry level talent from Europe.”
Hatton notes that most European talent who are already working and living in the U.K. have applied for ‘settled status’ which allows them to stay in the U.K. permanently.
Those moving to the U.K. for temporary work, such as to join a film or high-end TV production, must adhere to the government’s tier five (creative and sporting) visa system currently in place for non-E.U. nationals. This requires a job offer from a recognized sponsor.
How productions will be able to continue to use EU workers is probably one of the biggest areas of interest and concern around Brexit, says McGarry. “Fortunately, most producers are already familiar with the sponsorship route because they have to use this approach for bringing non-E.U. nationals into the U.K.”
McGarry says industry leaders are still hoping that a reciprocal arrangement will be agreed at the last minute to allow European crew to come into the U.K. on a short term-basis without a visa or certificate of sponsorship. “But there is no sight of that at the moment.”
U.K. AND EUROPEAN TAX INCENTIVES
Tax reliefs, which have underpinned the growth of production in the U.K., will not be affected by Brexit. This includes those available for film, high-end TV, animation programs, children’s television and video games, according to the BFI’s Brexit briefing document.
Content will still qualify for the applicable Creative Sector Tax Relief if it passes the U.K.’s relevant cultural test.
British productions, however, may find it harder to access European tax credits. Currently, U.K. personnel can qualify for other European member states’ cultural tests and can access tax credits there, but will lose this status after Brexit.
“The position in the U.K. is, at least for now, straightforward — the ability for E.U. productions to qualify for U.K. tax incentives will remain the same. The real concern is whether the same will remain true for U.K. productions being able to access tax incentives in Europe,” says McGarry.
“There is currently a lot of uncertainty around this and lack of clarity around what incentives will be available in different E.U. countries, so seek legal advice before committing to a foreign shoot in reliance on possible incentives.”
CO-PRODUCTION
Brexit will have no impact on companies’ ability to co-produce.
Co-production treaties between the U.K. and another country are not governed by E.U. law, as co-production agreements form part of U.K. legislation.
All co-production agreements, including bi-lateral co-production treaties and the European Convention on Cinematographic Co-Production signed by the U.K., will remain in place after Brexit.
“The European Convention on Cinematographic Co-Production is governed by the Council of Europe (an entirely separate body from the E.U.), not the European Union, and the U.K. will continue to be a party to the Convention,“ highlights the BFI.
The U.K.’s bi-lateral treaties with Australia, Brazil, Canada, China, France, India, Israel, Jamaica, Morocco, New Zealand, Occupied Palestinian Territories and South Africa form part of U.K. legislation, and aren’t affected by Brexit.
EUROPEAN WORKS
Crucially, U.K. films and TV programs will still count towards European quotas — which dictate that 30% of content on broadcasters and V.O.D. platforms such as Netflix must be European — even after the end of the transition period.
This means that the sale of British-made content by producers and distributors will be able to continue unaffected by Brexit.
This is because the U.K. is party to the Council of Europe’s Convention on Transfrontier Television, meaning it is included within the ‘European Works’ content quota.
COPYRIGHT
Copyright law is mostly staying the same in the U.K., because it is mostly territorial and the reciprocal protections which currently apply across the E.U. will continue to apply between the U.K. and the E.U. (such as the length of time books, films and music will be protected by copyright).
However, McGarry points out that the U.K. will no longer be under the jurisdiction of the E.U.’s highest court so differences might start to emerge as copyright cases start coming through the courts. “In fact, that’s already started happening. This could be a good thing, as it might mean more freedom and flexibility for the U.K.’s copyright laws to adapt to the U.K.’s creative market.”
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