Foreign Filming

When filming abroad it is essential to leave an ‘our way is the best way’ attitude at home and to try to adjust to a different world – an international business culture.  It is easier to fit your ways of working to theirs than the other way around.

It is therefore important to do as much research as possible into how to work in that country and if possible, speak to people who have filmed in the same area for tips and lessons learnt.

Reasons for Filming Abroad

• Requirement of the piece
• Editorial ambition to film in the country the piece is set
• Potential tax breaks
• Improve the look of the production
• Cost

Disadvantages of Filming Abroad

• Costs – costs of travel and overnighting and cost of living could out way any other potential financial benefits
• Risks – financial, health & safety, legal
• Time – additional time to travel and set up filming
• Barriers – language, culture, politics

Foreign filming – things to consider:

• Culture
• Politics
• Security
• Climate
• Health & safety
• Vaccines / medical
• Foreign & Commonwealth Office
• Language barriers
• Location taxation
• Foreign exchange potential gains / losses

Every country has its own culture and nuances of behaviour that they find acceptable.

Time researching cultural differences and international etiquette is invaluable, as good communication can significantly affect costs, time, logistics or even whether you are allowed to film or not.

Some common areas of differences are:

Communication
In some cultures, people can be loud and direct and tend to interrupt others during a conversation, whereas in other cultures they can be softly spoken, use indirect language and always wait for others to finish what they are saying.  Matching these communication styles can show respect.

Valuing Time
Some cultures are very precise with their time; they expect meetings to take place when arranged, starting and finishing exactly to timetable and will be offended if people are late.  Other cultures are very relaxed with time, often organising several meetings to take place at the same time and are offended if they are rushed.

Dress Code
Some countries have strict dress codes; in particular, Muslim countries require women to be modestly dressed.

Personal Space
In some countries, people (men as well) can be very touchy-feely with each other.  Hugs could be a regular way for men to greet male business colleagues, but for men to greet female business colleagues in the same way could be a huge faux pas. In other countries, any physical contact is deemed inappropriate.

Business Cards
In Arab and some Asian countries, it is important never to use your left hand to accept a business card, as this hand is reserved for personal hygiene.  In other Asian countries, such as China (including Hong Kong), Japan and Singapore, you give or receive business cards with both hands, often accompanied by a small box.  Writing on a business card, bending it or not looking at it before putting it away can be seen as disrespectful and could therefore damage the potential for future business relationships.

Gifts – Giving & Receiving
The etiquettes for giving or receiving gifts differ significantly across the world.  In some cultures, gifts are an important part of business relationships, however in other cultures, to offer gifts can be an insult or illegal if it is considered a Bribe (see Bribery Act).

• Bank accounts
• Petty cash
• Currency
• Cash & currency controls in country
• Encashment facilities
• Cashflow
• Foreign exchange risk
• Hedging
• Per diems payments
• Permits
• Cost of living
• Cost of foreign VAT
• Foreign tax/VAT rebate
• Cost of travel
• Withholding tax – many countries in the world impose a withholding tax on remittances outside their country, when working with overseas countries enquiries should be made to ascertain whether any such taxes may be levied.

See Section on Bookkeeping / Accounting, for foreign bank accounts and cashflows.

Dealing in foreign currencies can add significant complications to production accounting.  It is important to agree up front an exchange rate to use for the accounting system and cost report.  Where the actual costs are translated at a different rate, the difference in the value is recorded in the foreign exchange loss / gain account.  This can be a difficult area to manage for the cost report and should be constantly monitored.

One way to actively manage this is to hedge any exposure to currency movement, in order to mitigate the risk of production incurring foreign exchange losses. Hedging involves arranging to buy foreign exchange at an agreed rate, for actual delivery when required on a future date. This serves to fix the rate, and regardless of any actual movement in the exchange rate during this period, any such movements in the currency markets will not adversely affect agreed budgets / forecasts.

Per diem payments can be paid to cast and crew who are overnighting.  However, as the cost of living differs from country to country, the HMRC website details allowable rates per country, the benchmark scale rate expenses payments: accommodation and subsistence payments for employees travelling outside the UK.

www.hmrc.gov.uk/employers/emp-income-scale-rates.htm

Currency controls are in place in some countries.  This generally causes most problems when trying to remove currency out of the country.  It may be difficult to return any unused funds to the UK, so care should be taken as to how much money is transferred into foreign bank accounts.

It is recommended that professional advice is sought on the implications of foreign VAT before any commitments are made.  The structuring of contractual relationships can affect whether foreign VAT is charged, and /or whether foreign VAT is reclaimable.  This will have a significant effect on the cashflow and the budget.

It is always worth checking for bank holidays with the bank holding the encashment facility.  Some countries seem to have a large number of bank holidays.  They are not all national holidays; some can be just local to the town or region.

In countries such as South Africa, local income tax is payable on UK artists fees to SARS (South African Revenue Service).  The artists can then reclaim this tax on their UK tax return as double taxation relief.  Best Practice is to communicate this liability to the artists at the point of contracting, and to arrange for the artist or agent to make the payment.  Otherwise, the production company will be required to pay SARS directly, and it can then be difficult to reclaim the money back from the artist.

• Choosing a service company
• Contract
• Budget
• Cashflow
• FX rate
• FX risk
• Bribery act
• Wording of in-vision contracts
  • Cast
  • Extras
  • Crew
  • Locations
• Fee
• Services
• VAT

It is recommended that legal advice is sought on how to structure contractual relationships in foreign countries.

A Fixer is often an individual, who is a local resident, with experience of setting up shoots.   They can help arrange facilities, crew, locations etc, but the contracts for these are usually directly with the UK production company.

A Foreign Production Company can be contracted to take on full responsibility for completing the filming.  They are given the full budget and will deliver the completed film.

An Overseas Facility Company can act as a half-way house between using a fixer or foreign production company.  The facility company can act as a fixer to help arrange any of the services required, and can also contract directly with the suppliers, but will charge a commission for doing so.  There are significant benefits to using a facility company / fixer to contract and pay local cast and crew, as employment law can be complex.  Using local experts ensures contracts, payments and deductions are handled correctly.  UK production companies can inadvertently set themselves up as local employers, leading to all the responsibilities and costs this incurs.

Special Purpose Vehicle – In some countries, an SPV can be set up to be make the production, it is set up by the UK production company and the foreign production company.  This can enable local tax breaks to be accessed.

Where the local company raises contracts for anything or anyone In Vision, it should be ensured that the wording of the contract includes the buyout of Rights in accordance with the production’s needs.

Production Services Agreement

Legal advice should be sought when agreeing the production services agreement; it is not advisable to just accept the contract provided by the foreign fixer / foreign production company.  Some key areas to check include:

• Fee – how it is calculated, when it is payable
• Budget – is the budget agreed in sterling or foreign currency, therefore who takes the risk of exchange rate differences?
• Cashflow – it may be necessary for payments to initially exceed the budget, and then cash returned at the end e.g. timing of VAT reclaims etc.
• Contracting suppliers / crew – clarifying who is contracting the local suppliers and crew
• Detail of services required
• Bribery act responsibilities
• VAT – where the reclaiming of overseas VAT is not immediate consideration must made as to how this VAT cashflowed.
• Tax Credit – where reclaiming an overseas tax credit consideration must be made as to the timing of that income and who it is to be paid to.

Travel and logistics when filming abroad –

• Carnet
• Excess baggage
• Travel
  • Internationally
  • Within the country
• Accommodation
• Shipping
• Permits
• Location logistics
• Communication
  • Phones
  • Post
• Connectivity
• Visas / A1 Certificate

A Carnet is a document allowing the importation of certain goods to countries without paying customs duty.  This means that a detailed list of all equipment, props, consumables etc taken into the country must be produced.  Everything on the list must then also be taken out of the country after filming has finished.  It can be tempting to leave / sell / dispose of props in the country rather than incurring the cost of bringing it back to the UK, but if they are included in the carnet, they must be returned onto the UK , otherwise import duty may be payable.

Communication infrastructures can vary across the world.   It is important to research how communication is preferred in each country / area.  In many areas mobile phones work well, but in more remote locations satellite phones are preferred, however, care still needs to be taken as satellite phones are illegal in some countries as they are deemed to be linked to terrorist activity.  The reliability of postal systems also vary from country to country, some are not always reliable.

A1 Certificate

When UK cast/ crew are in an EU country, Gibraltar, Iceland, Liechtenstein, Norway or Switzerland, the country may need proof that they UK cast/  crew pay UK social security contributions.  This can be achieved by applying for an A1 Certificate from HMRC, as otherwise they may be required to pay social security payments locally.

https://www.gov.uk/guidance/apply-for-a-certificate-or-document-if-self-employed-in-the-eu-eea-or-switzerland-ca3837

• Tax
  • Sales
  • Income
  • Withholding Tax
• Cultural
• Visas
• Employment
  • Employed
  • Self Employed
• Contract
• Goods
• People

Laws
Legal advice should be taken on how to operate in each country.  Clarity should be sought over whether the legislation in the foreign country takes precedent over legislation in the UK or whether they are in conflict.  This can become a significant issue with Health & Safety and can be dependent on who the contractual relationships are between.

Certain countries require withholding tax to be paid on the earnings of UK citizens working in their country.  This commonly relates to entertainers.  The sums can be reclaimed from the individual’s tax return in the UK under double taxation relief.  It is therefore advisable to agree with agents that the individuals will be responsible for paying and subsequently their tax liability in the country.

Employment Law
Employment law can be complex. Best practice is to use local experts to contract local cast and crew.  This ensures payments and deductions are handled correctly and prevent the UK production company from inadvertently set themselves up as a local employer, leading to all the responsibilities and costs this incurs.

Bribery Act 2010
The penalty for committing a crime under the act is a maximum of 10 years’ imprisonment, along with an unlimited fine.  The act has a near-universal jurisdiction, allowing for the prosecution of an individual or company with links to the UK, regardless of where the crime occurred.   It is the responsibility of the UK production company and the individuals associated with it, to ensure bribes are not given or received in order to gain a commercial advantage.  Steps must be taken to mitigate the risks of this occurring; this can include educating individuals and stating their responsibilities in their contracts

Contracts
It is important to fully understand the pros and cons on the options of setting up contractual relationships, whether to book services, equipment, facilities, cast, crew etc. directly from the UK, through a special purpose vehicle or through a foreign production company.  This can effect:

• Budget
• Tax relief
• VAT rebates / reclaims
• Employer status
• Legal responsibilities

Insurance

• People
• Goods

See Insurance section for full details on insurance.

Care should be taken over which areas of insurance are mandatory in each country.  Advice should be sought from the insurance provider and fixer / foreign production company.

Areas to consider  –  filming abroad checklist :

Checklist For Foreign Filming.doc

Foreign Filming Questionnaire