Romanian Industry Looks to Break Impasse Over Hamstrung Rebate System as Lawsuits Pile Up

Amid a host of lawsuits by foreign productions looking to recoup money from Romania’s beleaguered cash rebate system, industry insiders say the situation has reached a crisis point, with one leading U.K. financier and executive producer warning that the government runs the risk of “obliterating foreign direct investment” into Romania if a resolution isn’t reached in the coming weeks.

Nearly a dozen lawsuits are currently active in the Romanian court system, which last month ordered the government to pay roughly $642,000 plus legal fees to the producers of “The World to Come” (pictured), writer-director Mona Fastvold’s romantic frontier drama starring Vanessa Kirby and Katherine Waterston, which filmed in Romania in 2019. The government has appealed the ruling.

The U.K. financier, who has two decades of experience in the country, says that an impasse now dragging into its third year has caused “immense reputational damage” to both the government and the industry. “It’s a very bad look for the country,” they say.

Despite the legal logjam, Romania continues to lure high-profile productions drawn to its varied locations, highly skilled crews and competitive costs. Among the projects it’s hosted in the past year are Tim Burton’s “Wednesday,” the upcoming Addams Family series for Netflix, and “Django,” the English-language reimagining of Sergio Corbucci’s classic 1966 Western, a Sky Studios and Canal Plus original that was arguably Europe’s biggest TV production in 2021.

Negotiations with foreign producers nevertheless have to concede that the Romanian cashback scheme isn’t on the table. “We’ve been straightforward with everybody and told them that currently we don’t budget with the rebate in mind,” says Alma Bacula, of Bucharest-based Icon Films, which serviced Netflix’s “Wednesday” as well as “Flowers in the Attic: The Origin,” a Lifetime limited series that shot in Romania last year.

Despite optimism over the launch of a cash rebate of up to 45% in 2018, the Romanian scheme has been plagued by missteps – and, arguably, bad timing – from the start. After a bureaucratic reshuffle following a change in government in 2019 the program ground to a halt, a problem that was compounded within a matter of months when the newly installed administration was forced to contend with the coronavirus pandemic.

Industry sources say that public health crisis prompted the government to shift its priorities away from the cultural sector. A similar dynamic played out earlier this year with the Russian invasion of neighboring Ukraine, which stalled what those sources describe as positive momentum in talks with Romanian officials.

The government has suspended applications to a program that is financed to the tune of €50 million ($52.8 million) a year. The lawsuits over outstanding payments are piling up, with the Romanian Alliance of Film Producers estimating that more than €50 million ($52.8 million) is owed to international productions that filmed in Romania since the rebate’s launch.

The backlog has rattled confidence in the industry, which local producers fear won’t be easily regained. “The most important thing today is for us to recoup all the money for the companies who came in and trusted the government to invest in this country,” says Bacula.

Bogdan Moncea, of Castel Film Studios, which hosted the Bucharest shoot of “Django” and also serviced Isaiah Saxon’s fantasy epic “The Legend of Ochi” for A24, says the studio currently has “no major projects” in the pipeline. “It’s getting critical. It’s at a very low point – probably a decade-long low,” he says.

Romania is struggling to keep pace in a fiercely competitive region, which includes not only production powerhouses Hungary and Czech Republic but rising hotspots such as Serbia and Greece.

Frame Film producer Andrei Boncea is currently in Slovakia prepping “The Strangers,” a trilogy miniseries for Lionsgate directed by Renny Harlin that will begin principal photography in August. He recently wrapped production on “The Performance,” a pre-World War II drama directed by Shira Piven that was originally slated to film in Romania, but was lured to Slovakia in part because of its 33% cashback program.

“They have a very effective and simple cash rebate scheme, which is workable,” Boncea says. “In Slovakia, we got in two days what in Romania it took a year to get.”

The veteran producer is involved in litigation to recoup roughly $7 million owed to the production of Lionsgate’s action film “The Protégé,” from Bond director Martin Campbell, which was produced in Romania by Millennium Media. The next step, he says, is a total overhaul of a rebate system that he and other Romanian producers argue was poorly designed from the start. “We have to come up with a new system, and to pursue the government to implement a new system that will be fair and transparent.”

The U.K. financier is currently preparing for high-level discussions with government officials “designed to find a way of cutting through the regulatory confusion, so that investors can finally be paid what they have been owed, in some cases, for more than two years,” they say. It’s part of an all-out effort to break the impasse. Ana Mirea, president of the Romanian Film Commission, tells Variety that talks between the government and the industry “have gained a lot of traction” in recent months, even if that dialogue “has not been visibly moving” from the outside.

“I don’t think it’s bad faith” on the part of the government, says Mirea, stressing that Romanian officials were ill-equipped to deal with the “great unknown” of the rebate system when it was introduced in 2018. “I think it was a bit difficult for unprepared public workers to wrap their heads around how you do this.

“There have been huge efforts from the film producers’ alliance, from the commission,” she adds. “It’s not just about the money. It’s about [the fact] that this needs to work in order for this country to stay on the map.”

Boncea and others remain optimistic that a solution will be reached. Despite a growing workload in Slovakia, the producer is expanding his company’s studio complex in Bucharest, a show of confidence in the Romanian industry’s continued ability to lure international productions and deliver at a world-class level. “We are looking for other solutions, but we keep fighting for Romania,” he says. “We will do it, I’m sure.”

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