FAQ - The Danish Production Incentive Scheme

Q: What documentation is required for the 60 pct. financing? Are fully executed long-form agreements required, or are Letter of Intends sufficient?

A: At the time of application, the production must have 60 pct. of its financing confirmed. According to the Executive Order on Produktionsrabatordningen, confirmed financing is defined as financing confirmed through a Letter of Commitment or a corresponding level of confirmation.

Q: How can the auditor verify the 60 pct. confirmed financing? Must the 25 pct. be documented and not confirmed?

A: The auditor must verify that the financing has been confirmed in accordance with the requirements set out in the executive order. Likewise, the auditor must verify that the 25 pct. foreign financing must be documented in accordance with the requirements in the executive order and auditor’s instruction.

Q: How should the audit of the financing plan be understood, given that the plan may be subject to changes?

A: The auditor must verify that the financing stated in the financing plan has been confirmed in accordance with the requirements set out in the executive order, that the foreign financing has been documented in accordance with the requirements of the executive order and auditor’s instruction, and that the production’s total budget has been established in accordance with generally accepted budgeting principles and the specific characteristics of the industry.

Q: Can a 100 pct. Danish-owned sister company in, for example, Germany invest 25 pct. in the project and be accepted as the required 25 pct. foreign investment?

A: The requirement that at least 25 pct. of the production’s total budget must originate from a foreign source of financing means that the financing must come from a legal entity established and tax resident outside Denmark.

A 100 pct. Danish-owned sister company that is independently established and registered in another country, for example Germany, may in principle be regarded as a foreign source of financing.

There is no requirement that the foreign source of financing be independent of the applicant. However, it is assumed that the financing is documented and constitutes an actual and customary capital contribution to the production.

Q: Must the foreign financing be documented in the budget and not in the financing plan?

A: It must be documented in the financing plan and marked as confirmed or documented foreign financing. In the executive order behind the scheme, it is incorrectly stated, that this documentation is to be stated in the budget. However, as it is not possible to document financial sources in the budget this should be done in the financing plan instead.

Q: When is financing considered foreign? For example, if funding comes from a world sales company based in Denmark but buying the Nordics, does that count in parts?

A: Financing is considered foreign when it originates from a legal entity established and tax resident outside Denmark.

The decisive factor is the place of establishment of the financing entity, not the territorial scope of the rights acquired.

Accordingly, financing from a Danish-based world sales company does not qualify as foreign financing, even if the agreement concerns rights for foreign territories such as the Nordics. Such financing cannot be counted proportionally.

Q: Is the 25 pct. international documented financing a part of the 60 pct. confirmed financing requirement?

A: The 60 pct. confirmed financing requirement and the 25 pct. foreign financing requirement serve different purposes and should be understood as separate conditions.

The 60 pct. requirement concerns the level of confirmed financing at the time of application. The confirmed financing must be set out in the financing plan, which must be endorsed by an auditor.

The 25 pct. requirement concerns the origin of the financing, i.e. that at least 25 pct. of the total budget must originate from foreign sources.

The foreign financing must be documented as such, but it does not necessarily have to constitute 25 percentage points out of the confirmed 60 pct.

Q: Can you apply with more than one project, or will that compromise the applications?

A: You may apply for funding for more than one production for the same application round. Each application will be assessed independently based on the criteria set out in the scheme. Submitting multiple applications does not in itself affect the assessment of the individual projects.

Q: If a live action production has an animation layer, should you apply under the Live Action Scheme or the Animated Films and Series Scheme?

A: To asses, whether a production constitutes live action, documentary or animation, you are in general referred to the executive order’s definitions as they are lain out in Article 3.

However, if a live-action production includes animated elements, the application should normally be submitted under the scheme that corresponds to the main format of the production. If the production is primarily live action with animated elements or layers, the application should therefore – ceteris paribus - be submitted under the scheme for feature films and fiction series.

In general, only productions where animation constitutes the primary form of expression should apply under the scheme for animated films and series.

Q: Can you apply as a Danish production service company or co-producer with an international lead producer?

A: Yes. Please note that the grant recipient must carry out business activities through a permanent place of business or a similar establishment in Denmark, at the time of payment of the grant.

Q: Are all the parties involved in a production (independent lead producers, co-producers and production service companies) subject to the minimum requirements for the applicant?

A: No. Only the production’s lead producer is required to have produced at least one film, series, documentary or animation production with wide distribution in order for the production to be eligible for funding.

Q: Is it possible for an independent lead producer, co‑producer or production service company to apply with a streaming service behind the project?

A: Yes, provided that the lead producer, co-producer or production service company applying is independent, i.e. not majority-controlled by a television broadcaster or a streaming service. Please see the application guidelines for further information on majority control.

Q: How are projects prioritized if there are more eligible projects than available funds?

A: Projects are prioritized according to their score in The Production and Cultural Test. Projects are ranked from highest to lowest. In the event of a tie, priority is given to the production with the highest level of eligible spend in Denmark in a cascading sequence until there are no more available funds in the scheme. Thus, if the last recipient in the sequence have applied for a higher amount than what is left in the scheme it will be offered the remaining available funds.

If there are more eligible projects than available funds, an applicant who scores enough points to be prioritized but cannot receive the full amount of 25 pct. of eligible expenses due to insufficient funds will instead be granted the remaining available funds. As an example, please see table below.

The table is with fictive numbers but serves to illustrate how projects are prioritized and how the last possible recipient in the sequence will be offered the remaining available funds even if applied for a higher amount than what is left in the scheme.

Q: Is it possible to bring foreign co‑productions to Denmark solely for this scheme?

A: Yes, provided that the eligible costs in Denmark meet the minimum criteria. Please see the application guidelines for the specific minimum criteria for each production type.

Q: Does the applicant need to establish a special purpose vehicle (SPV) specifically to manage the production?

A: No. The applicant is not required to establish a special purpose vehicle (SPV) for the production. Applications may be submitted by an existing production company.

If a special purpose vehicle is established for the production, this may also act as the applicant, provided that it fulfils the relevant eligibility criteria.

The scheme may only be applied for by independent lead producers, co-producers, or production service companies.

Q: How does one achieve 100 points in the budget-related part of the test?

A: The budget-related part of the Production and Cultural Test consists of two separate elements:

1. the production’s total budget, and (100 points)
2. the level of eligible expenditure in Denmark (100 points).

Points are awarded based on the size of the production’s total budget and the share of the budget that is spent on eligible expenditure in Denmark. The score increases proportionally according to the thresholds set out in the Production and Cultural Test.

A score of 200 points is achieved when the production reaches the highest scoring thresholds in the two budget-related elements of the test.

Q: If there are many great narrative/fiction films with higher budgets, how are documentary films prioritized given their typically lower budgets and fewer opportunities to score points?

A: Applications are assessed on the basis of the overall score in the Production and Cultural Test and in accordance with the criteria set out in the scheme. The test is designed to take into account differences between types of productions, including documentaries, for example through the budget-related elements.

Documentary productions are therefore assessed within the same framework as other productions, but the scoring model reflects that documentaries typically operate with different budget levels and production conditions.

Q: Could you please clarify how you assess the Production and Culture Test submitted by applicants, particularly regarding the assignment of points?

A: As part of the assessment process, the Danish Agency for Culture and Palaces reviews the submitted test and the accompanying documentation to verify that the criteria have been correctly applied and that the information provided is consistent with the application and supporting materials.

Where relevant, the Agency may request additional documentation or clarifications in order to ensure that the scoring is in accordance with the terms of the scheme. The final validation of the test, including the point assignment, is carried out by the Agency as part of the overall assessment of the application.

Q: What does the “50 pct. in Denmark” mean in the Production and Cultural Test? Is it the narrative?

A: There is more than one question in the Production and Cultural Test for feature film and fiction series that refers to “50 pct. in Denmark”. One of questions is regarding whether 50 pct. of the total running time of the film or series takes place in Denmark or in a fictional location with a Danish connection. Another question is regarding whether At least 50 pct. of the story or the underlying material is in Danish. Please see the glossary in the test for further information.

Q: It seems that you are assuming that applicants themselves assign points in the production and culture test that they submit. If so, how do you actually qualify that point assignation in your review process?

A: When submitting the application, the applicant must provide a declaration on the correctness of the information given in the application. This includes the information the applicant has filled out in the Production and Cultural Test. 

For the application to be eligible, applicants are required to complete the Production and Cultural Test as part of the application and to indicate the relevant scores based on the criteria set out in the scheme.

As part of the assessment process, the Danish Agency for Culture and Palaces reviews the submitted test and the accompanying documentation to verify that the criteria have been applied correctly. The Agency assesses whether the information provided by the applicant substantiates the points claimed in the test.

Where necessary, the Agency may request clarifications or additional documentation. The final validation of the Production and Cultural Test, including the point allocation, is carried out by the Agency as part of the overall assessment of the application.

Q: How are the points calculated for the production’s total budget?

A: Points for the production’s total budget are awarded based on the size of the total budget of the production. The Production and Cultural Test contains predefined budget intervals, each corresponding to a specific number of points.

Applicants must indicate the production’s total budget in the test, after which the corresponding number of points is assigned according to the relevant budget interval.

Q: Can salaries for personnel outside Denmark, but in another EU country, be included in the eligible costs?

A: No. Salaries may only be included, if the work is carried out and taxed in Denmark.

Q: All DFI funding come with a demand of a DK spend 1 to 1. So, if the project needs to have a minimum eligible DK budget of DKK 3 mill for the grant and the project has received DKK 4 mill of funding from the DFI, then the project needs to have a total DK spend of DKK 7 mill. Is that correctly understood?

A: The guidelines describe eligible costs, as well as what is not considered eligible costs, including costs that are already covered by other schemes.

Q: Is the producer’s fee eligible expenditure under the Danish Production Incentive Scheme?

A: Producer fees may be considered eligible expenditure where they correspond to producer services directly related to the development, production or post-production of the work and are included in the production budget as direct production costs.

However, general producer fees, company fees or overheads payable to the production company, including fees calculated as a percentage of the production budget, are not considered eligible expenditure.

Only costs that can be directly attributed to specific production activities may be included as eligible Danish expenditure.

Q: What happens if a production applies during the application window and begins principal photography after the application window but before the Agency issues a grant decision?

A: A grant cannot be awarded if principal photography has started before the Danish Agency for Culture and Palaces issues a grant decision.

Q: Is the entire production ineligible if it has already started at the time of application, or only the pre-decision spends?

A: The entire production is ineligible if principal photography has started in Denmark before the grant is issued.

Q: Can expected start date of the production be after the beginning of principal photography in Denmark?

A: No. You cannot apply for at grant, if you have started principal photography in Denmark. Furthermore, the costs that may be included in the calculation of eligible costs must be incurred after the expected start date.

Q: What is meant by “to go into production”?

A: For film, fiction series, documentary film and documentary series, the expected start date of production refers to the start of principal photography carried out in Denmark.

For animation film and animation series, it refers to the start of main animation carried out in Denmark.

Q: Must it be disclosed if one is exempt from the 60 pct. cap on aid intensity under state‑aid rules?

A: Yes. The applicant must indicate the state aid intensity to which they are entitled under EU State aid rules and how much state aid or other EU funding they expect to receive in a state aid declaration.

A template for the mandatory state aid declaration is available on the website of the Danish Agency for Culture and Palaces.

Q: Is it possible to bring foreign post-prod/VFX (and post-prod/VFX only) to Denmark within the scope of the incentive? If so, is it realistic from a cultural test standpoint?

A: There is no scheme solely for VFX. However, you may apply for a grant covering VFX costs by applying on behalf of the entire live action production.

Only costs carried out and taxed in Denmark may be included. Eligible costs must be incurred after the expected start date of production, which in Denmark is defined as the start of principal photography. It depends on the other applications submitted in the round whether it is realistic.

Q: Can you apply for a grant for VFX?

A: Yes, but there is no scheme solely for VFX. However, VFX costs may be included if the application is submitted on behalf of the entire live action production and the production meets the minimum criteria.

Q: If you receive a grant, but not the full amount you applied for, are you then guaranteed to get the full amount if you wait until the next round or do you have to reject the grant and apply again in the next round.

A: No. If you decline a grant and apply again in the next round, you are not guaranteed to receive the full amount.

Q: Can one decline a grant commitment if the amount is insufficient?

A: Yes. You may decline the grant if you do not wish to accept the offered amount.

Q: What happens if production does not commence after receiving the grant?

A: If production does not commence after the grant has been awarded, the Danish Agency for Culture and Palaces may decide that the grant is to be reduced or withdrawn in whole or in part, that payment of the grant is to be suspended, that paid amounts are to be offset against other amounts due, or that paid amounts are to be repaid in whole or in part.

Q: Will you publish the score from the production and cultural test of the productions who receive a grant as a reference for future applicants?

A: We will publish the titles of the productions who receive the grant after the grants are issued and with their total score from the Production and Cultural Test.