The U.K.’s Department of Culture, Media and Sports has confirmed new minimum spending requirements for feature film coproductions with Canada.

The new measure stipulates that a minimum of 40% of a budget must be spent in the U.K., or 35% in the case of tripartite copros and 30% for multipartite deals. Costs related to European Union/European Economic Community personnel or facilities will not be considered U.K. expenses, and should be shared pro rata, that is, proportionately with the financial contribution of each coproducer.

The 20% minimum financing rule has not changed, allowing Canadian financing to cover U.K. expenses.

As reported earlier in Playback, industry commentators predict the new expenditure requirements will result in serious declines in Canada-UK coproduction activity.

Telefilm Canada says the changes are temporary and will be subject to a bilateral review in early 2005.

Telefilm executive director Richard Stursberg says long-established relations with the U.K. and the scale of economic activity (56 projects last year, with total Canadian budgets of approximately $239.5 million) were the primary reasons to rethink the minimum spend and ‘to ensure that the agreement between the two countries is even more mutually beneficial.’

The new requirements will apply to projects seeking advanced ruling from both Telefilm and DCMS as of, and after, Jan. 1, 2004, with some exceptions, including applications filed prior to Jan. 1, 2004, for films starting principal photography prior to Aug. 31, 2004, that can continue to comply with the minimum financial and filmmaking contributions specified in the agreement.

Exceptions to the new 40% requirement may also be granted if the DCMS is satisfied the nature of the production itself prevents the minimum from being spent in the U.K., or if the production provides outstanding cultural and/or artistic benefits to both countries. The changes do not affect TV copros.

In response, the CFTPA issued an advisory to its members on the DCMS announcement.

-www.telefilm.gc.ca