Curious About Co-productions? What Producers Need to Know.

Joseph Chianese
Joseph Chianese Member Posts: 68
edited April 23 in Producers

When powerful collaborations bring unique global perspectives together, magic happens. You’ve seen it in films like ‘Cloud Atlas’ and ‘Tinker, Tailor, Soldier, Spy,’ both great examples of riveting stories born from co-productions.

Maybe the thought of working with a global collaborator inspires you, or perhaps you’re working on a great script that brings two worlds together? Whatever the case, we’re here to help demystify the concept of co-productions for you.

By the end of this post, you’ll understand:  

  • What variations of co-productions exist 
  • How co-productions are managed around the world 
  • High-level pros and cons 
  • Where to find (and how to vet) a potential co-production partner 
  • Ways to evaluate if a co-production makes sense for your project  

There’s a lot to cover, so let’s dive in. 

Starting at square one: What is a Co-production? 

At its simplest, a co-production is a joint venture between two or more production companies—but that’s just the beginning.

Co-productions can be national or international:

  • A national co-production exists when two or more different production companies from the same country work together.  
  • An international co-production forms when two producers from different countries enter a joint venture together.

Co-productions can be official or unofficial:  

  • An official co-production forms when two production partners from countries that have a formal treaty with one another agree to work together—and adhere their project to national or regional government-funded requirements.  
  • An unofficial co-production occurs either when no treaty exists between countries or when a project between treaty countries doesn’t satisfy official qualification criteria.  

 In an official co-production, both producers can access the national status benefits of each other's countries. As Sarah Westman Liu, explains in our recent Master Series webinar, Unlocking the Myths and Benefits of Co-Production,  “By qualifying as a national in your own country, you’re likely to get higher incentive rates and can take advantage of other government subsidies. You also reduce risk by pooling creative, technical, and financial resources with another producer.”  
Unofficial co-productions occur when two creators from different countries that have no official treaty want to work together (whether an official co-production treaty exists within the respective countries.) For example, in the United States, where there are no treaties with other countries, producers utilize a Production Service Agreement (PSA) to create a joint venture (an unofficial co-production.) A PSA is a contract between a lead producer and a production company that defines how they’ll work together to execute various aspects of producing a film or TV project. 
There can be downsides to operating outside an official co-production treaty, but as Executive Producer Alex Boden—who specializes in managing co-productions—points out, there are benefits, too. He says, “PSAs give you lots of flexibility in terms of where and how you spend your money!”  

Co-production treaties can be bilateral or multilateral:  

  • A bilateral co-production treaty is an agreement that applies to two specific locations, for example, Canada and Brazil. 
  • A multilateral co-production treaty is an agreement that applies to a group of countries. For example, the Nordisk Film & TV Fond serves as a treaty agreement between five Nordic countries (Denmark, Finland, Iceland, Norway, and Sweden).  

Now that you understand the differences between national, international, official, unofficial, bilateral, and multilateral co-productions (phew!)—let’s talk about how they operate.  

How to manage an official co-production  

 Productions must meet specific requirements to be considered ‘official.’ 
Requirements vary by country, region, treaty, or organization—but typically include: 

  • Minimum spend  
  • Local hiring ratios 
  • Passing a cultural test 
  • Domestic creative and technical participation in the production 
  • Domestic or international distribution deals 

Most countries also require producers to have financing in place before the commencement of production.

Next, let’s go a level deeper and look at how co-productions are managed in three major industry hubs.

Co-production programs around the world

Three global filming hubs, Canada, the UK, and Australia all have robust co-production programs. 

Canada has the largest bilateral co-production treaty network in the world, featuring audiovisual treaties with close to 60 countries. See the full list. 

The UK has bilateral co-production treaties with Australia, Brazil, Canada, China, France, India, Israel, Jamaica, Morocco, New Zealand, occupied Palestinian territories, and South Africa. See the full list here.

Australia has co-production treaties with Canada, China, Germany, India, Ireland, Israel, Italy, Korea, Malaysia, Singapore, South Africa, and the UK—and is a signatory to memorandums of understanding (MoUs) with France and New Zealand. See the full list

Canadian co-productions 

In Canada, there are three types of production collaboration: Official Treaty Co-productions, Co-ventures (unofficial co-productions), and Service Productions, wherein Canadian companies provide services to foreign projects.

These types of collaboration have access to two distinct tax credit programs:

An official treaty co-production can access the maximum potential for tax credits, including both Federal and Provincial programs for qualified expenditure. While National productions have higher rates, official co-productions qualify for content credits via the Canadian content program, which affordsCanadian content tax credits for the Canadian portion of the project.

In addition to certifying with tax credit regulators, keep in mind that you must certify as an official treaty co-production with Telefilm—the regulator of co-productions in Canada.

Co-venture and service productions, on the other hand, can utilize The Production Service Tax Credit (PSTC) program, which provides eligible production corporations with a tax credit for qualified Canadian labor expenditures incurred by an accredited production.

 For US producers wishing to collaborate in Canada, co-ventures can be certified with CRTC, Canada’s broadcaster regulator, and assigned a special recognition number to qualify as Canadian content for broadcast purposes only. New legislation (Bill C-11) also extends this right to streamers. If a co-venture presents too many hurdles, however, US producers can also use a PSA with a Canadian producer. 
As one of the world’s most active co-producing nations, Canada can bring financing, expertise, tax credits and more to international projects. Each year, according to Telefilm Canada, more than 60 films with a total production cost of around $362m (c$500m) are made as official  co-productions between Canada and another country. That is made possible by the co-production treaties Canada has — and that Telefilm administers — with nearly 60 countries, including the UK, France, Germany, Ireland, Australia, New Zealand, Italy, Spain, Brazil, China, and India. Learn more about Canadian co-productions here.

United Kingdom (UK) co-productions

There are many benefits for co-producers considering the UK, including access to the UK Film Tax Relief, the BFI Film Fund, the UK Global Screen Fund, and additional National and regional film incentives such as Scotland's Production Growth Fund, or the West Midlands Production Fund.  

 International co-production is a new frontier for many UK independent producers, as an increasing number who are struggling to pull together rising budgets at home are finding avenues of finance through working with European and international partners. 
In the UK, there are some fundamental requirements to apply, including “Minimum Spend” which is generally between 15% and 30% and is treaty dependent. Similar to Canada, quotas and requirements, down to the number of people involved with specific nationalities, must be met, and the British Film Commission—the co-production regulator in the UK—will review everything in detail before issuing a final certificate. 

 For US and Canadian production companies wishing to collaborate in the UK, incentives are accessible by way of a UK Production Service Agreement, or PSA.  

 Recent UK co-productions include the Ireland-UK co-pro The Miracle Club, and the Australian co-production, An Ideal Wife. One of the most high-profile is The Return, a minority UK co-production with Italy, Greece, and France. Others include Great Point’s UK-Ireland project Kneecap, and the UK-Finland-Belgium co-production Sebastian.  Learn more about UK co-productions here.

Australia co-productions

In addition to the diverse population and stunning locations, Australia’s co-production benefits can be significant budget boosters for filmmakers.  
Participating in an Australian co-production may allow producers to: 

  • Access a lucrative Producer Offset tax rebate 
  • Apply for funding from Screen Australia and other government agencies 
  • Take advantage of having access to excellent crews and bankable cast 
  • Utilize state-of-the-art soundstages and editing facilities 

 Australia has ramped up its offerings in recent years. State incentives are strong, and as a country, they’re very supportive of producers—particularly in Queensland, Victoria, and Northern Territories. Australia is an English-speaking country, which can be a perk to US producers. Just be sure to factor shipping and travel expenses into your production costs.

Examples of Official Co-Productions include Australia-UK films ‘Bright Star’ and ‘The Railway Man,’  France co-production ‘The Tree,’  and Australia-China co-productions ‘33 Postcards,’ ‘The Dragon Pearl,’ and ‘Children of the Silk Road.’ Learn more about Australian co-productions here.

Vetting a co-producer 

 In many cases, co-productions are pursued when two producers who are very familiar with each other have already worked to develop trust and transparency. But if you’re just starting out and are on the hunt for a viable co-creator, it’s important to know what traits to look for.

In an ideal scenario, you and your co-producer will have: 

  • A shared language 
  • Cultural and historic ties 
  • A similar approach to producing 
  • Experience with the logistics of moving money, people, and equipment across borders 
  • Access to good financial and incentive benefits 
  • Appropriate locations, services, and people available in both of your countries

Festivals and markets can be a great place to start the search. But if you’re tempted to follow in Alex Whitman’s footsteps (from the 1997 flick Fools Rush In)—don’t. The most important thing you can do is take your time.

Vet any potential partners the same way you would any important hire: Check references, review their work, learn about their work style, look at their social profiles and personal branding, and verify that their style matches your style.

When to pursue a co-production (and when it may not make sense) 

As you can see, there’s a lot to consider around co-production. Projects need to be carefully evaluated on a case-by-case basis; but there are some generalized pros and cons you can anticipate.  

 Top benefits of co-productions can include:

  • Creating more culturally relevant programming
  • Bringing in additional creative expertise
  • Access to a wider range of sources of financing, talent, and other resources
  • Exposure to a larger and wider audience
  • More opportunities to secure government funding via local production incentives
  • The ability to build strong industry relationships and expand your network
  • Being able to pool financial resources (equity from several countries and inclusion in domestic television broadcast quotas, for example)
  • Access to additional tax incentives, another domestic market, and desired locations 
  • Opportunities to learn from partners 

Countries also stand to benefit, both economically and culturally, from co-productions.  

Pitfalls, however, do exist. Common ones to watch out for can include: 

  • More administrative work and associated costs 
  • Co-production tax in the UK (though it can be a wash due to good tax breaks) 
  • The value of the time you (the producer) spend working through details 
  • Treaty requirements may be incompatible with your project specifications 
  • Language barriers 
  • Different production styles or processes 
  • High travel and shipping costs 

 Financial and resource benefits can be compelling, but dealing with two countries, two sets of laws (and accountants and regulators) means there's a lot of administration involved—which translates to additional costs. So how do you decide?

The bottom line

At the end of the day, there should be an organic reason for moving forward with a co-production.  

Before determining if co-production is right for you, it’s important to do your due diligence. It’s also wise to work with experienced lawyers, accountants, and financial advisors early and often to help you make the right call.

If you’re ready to learn more, watch the replay of our Master Series co-production webinar for more insight from our team of experts, and when you’re ready to discuss your next project, get in touch.

And remember, you’ve got experts on your side. From incentive tracking and comparison tools, to tax credit placement and administration, the team at Entertainment Partners, and our UK affiliate FLB Accountants, are always there to help with your co-production inquiries, as well as handle all your production incentive needs.

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