Coproduire avec le Canada
Sébastien Lachaussée & Elisa Martin-Winkel

Sébastien Lachaussée & Elisa Martin-Winkel

Coproduction between France and Canada : a new treaty

A new co-production treaty between France and Canada, replacing the pre-existing treaties and laying a new foundation for collaboration between the two countries, came into effect on May 1, 2022, following its signing in the summer of 2021.

In this context, it is essential to review the possibilities of partnerships between France and Canada and the various Canadian funding sources.

  • French-Canadian co-production:

Before the overhaul of the system and the signing of the new treaty, many treaties had been signed since the 1980s between France and Canada (cinema, television, animation), leading to numerous collaborations over the years.

Thus, over the last 10 years, Canada has been an important partner in international French-initiated co-productions, with an average of 4 theatrical films co-produced per year. In terms of Canadian figures, France is also well represented and between April 1, 2021 and March 31, 2021 Telefilm Canada counted 12 co-productions with France out of a total of 49 films in bipartite co-productions.

The new treaty takes into account the evolution of practices and establishes rules applicable to all audiovisual works, whether they are intended for initial distribution in cinemas, on a television service or on an audiovisual media service on demand.

Typically, the treaty establishes minimum investments:

– The financial contribution of the French producer to a work and the Canadian producer must not be less than 20% of the total production budget.

– For cinematographic works, the minimum financial contribution may be reduced to 15% of the total production budget, or to 10% production for French-language cinematographic works, with the consent of the administrative authorities.

– If a work is co-produced with a third country, the minimum contribution from third party producers cannot be less than 10% of the total production budget.

In addition, the share of French or Canadian elements in a work must be reasonably proportionate to the financial participation of the co-producer concerned. An exception may be made, in particular, for expenses related to screenwriting and for creative purposes.

Under this treaty, everything is done to encourage Franco-Canadian collaboration. French producers have every interest in looking into this, especially since Canadian aid can be substantial.

We propose here a quick tour of the devices set up for cinematographic films, many aids also exist for audiovisual production.

  • Aids available in Canada:

Canada has a number of federal and local assistance funds. The main funds are managed by Telefilm Canada (federal) and SODEC (Quebec), as well as numerous tax credit mechanisms. The National Film Board fund (Quebec), which is very selective and not very well suited to international co-production, and the Ontario media development corporation, which has a much smaller budget, should be excluded.

Telefilm Canada

Telefilm Canada is a federal Crown agency reporting to the Department of Canadian Heritage that specializes in the promotion and development of the Canadian audiovisual industry. It provides financial and strategic support to the Canadian film industry. It manages the Feature Film Fund.

Telefilm’s assistance is generally set at approximately one-third of eligible Canadian production costs, with various caps applicable

– For projects with a Canadian budget of less than $1.5 million: the lesser of 49% of Canadian production costs or $500,000;

– For projects with a Canadian budget between $1.5 and $3.5 million: one-third of eligible Canadian production costs;

– For projects with a Canadian budget greater than $3.5 million: ✓ The lesser of 49% of Canadian production costs or $3.5 million for French language projects. ✓ The lesser of 49% of Canadian production costs or $4 million for projects in other languages.

The fund can be applied for by a Canadian producer for films with a budget of more than $250,000 CAD. If the budget is over $3.5M, a firm commitment from a Canadian distribution company must be confirmed to ensure the film’s release in Canadian theatres within one year of delivery.

It should be noted, however, that the evaluation criteria are rather cumbersome and not very favorable to minority co-productions.

Indeed, the program’s guiding principles clearly detail that it is to support the production of feature films that include significant Canadian creative elements, while adapting this criterion for international treaty co-productions.

Within this framework, the organization also takes into account the potential for optimizing investments, the skills development process and the visibility and promotion of the Canadian audiovisual industry.

In July 2021, Telefilm Canada announced that it was supporting four new co-productions between France and Canada, all of them with a majority for Canada: « La mort n’existe pas » an animated film by Félix Dufour-Laperrière (Embuscade Films CA / Miyu Productions FR / Doghouse Lux. “Un été comme ça  » by Denis Côté (Metafilms Inc. CA / CinéFrance Studios FR),  » Le frère  » by Bachir Bensaddek (Possibles Média CA/Rectangle Production FR) and  » Un grand homme  » by Philipe Lesage (l’unité centrale CA / Shellac Sud Fr).

The « Société de développement des entreprises culturelles » (SODEC)

Quebec is a natural partner for a Franco-Canadian co-production, as the language community favours efficient exchanges. Created in 1975, SODEC’s goal is to promote and financially support the production of « quality films » and in this sense it is a financial partner of choice when one wishes to co-produce a film in Quebec.

The last budget voted for 5 years provides $20M for the development and production of French-language feature films, thus supporting collaboration between France and Quebec.

As for feature film production assistance, it has several components and we will only detail the specific conditions for Quebec minority co-productions of fiction feature films.

In this context, at least 50% of the foreign financing must be confirmed, other than the co-producer’s equity contribution, and this must be supported by letters of confirmation of financing.

In evaluating the project, SODEC takes many elements into consideration, including : the strategic agreement concluded with a foreign partner with a view to obtaining, in reciprocity, a majority Quebec co-production; the potential economic benefits of the production and exploitation of the film ; the terms of recoupment and the quality and progress of the script.

SODEC’s cumulative investment can reach a maximum of 49% of the Quebec budget, but generally does not exceed CAD 350,000.

Between 2019 and 2021, SODEC supported « L’état sauvage » by David Perreault (Mille et une productions FR/ Metafilms QC), « Falcon Lake » by Charlotte Le Bon, co-produced by CinéFrance Studios and Onzecinq (France) and Metafilms Inc (Quebec), and « Fleur Bleue » by Geneviève Dulude-De Celles, co-produced by Colonelle Films Inc (QC) and Les Productions Balthazar (Fr).

For Quebec majority films, the conditions depend on the film’s budget, but also on the language (French or English) and can reach up to 65% of the Quebec budget.

In 2020, SODEC supported « Un été comme ça » (A summer like this), « Le frère » (The brother) by Bachir Bensaddek and « Un grand homme » (A great man) by Philippe Lesage, mentioned above.

Tax credit in Canada

There are two types of non-cumulative tax credits available in Canada, one for production services and one for the production itself, which we will focus on.

Then there is a federal tax credit and regional tax credits, which are stackable. Many provinces have a production tax credit, such as Ontario, British Columbia and Nova Scotia, which are all compatible with the federal tax credit.

We will limit ourselves here to the example of the province of Quebec to make the following observations:

– The Canadian system is more flexible than the French system; any fiction or animation film that qualifies for the co-production treaty is eligible for the tax credit as long as the Canadian co-producer can prove that it has a broadcaster, a national distributor or a platform commitment

– The rate of these tax credits is interesting, especially since they are cumulative: for Canada (Federal) up to 25% of eligible labour expenditures, which cannot exceed 60% of production costs (less the amount of assistance received) and for Quebec up o 32% of labour expenditures which cannot exceed 50% of the eligible production costs of the film so that the tax credit can reach a maximum of 16% of the costs incurred including eligible labour expenditures (if adapted from a foreign concept/format: 28% /14%) – higher rates exist for certain projects

– there is no cap on the amount of the tax credit

– the basis of eligible expenses is complex and rather limited, production costs are very limited and labor expenses constitute the majority of eligible expenses. The seemingly very advantageous rates are therefore moderated by a low base of eligible expenses.

Moreover, the payment deadlines for the Canadian tax credit are long and often occur after the film is completed and at the end of the fiscal year. This system does not really allow for the financing of the film. The benefit of the Canadian tax credit is more in the long term than in immediate financing, which may make it less attractive to co-producers looking for immediate investments and financing.

Finally, from a practical point of view, Canada has a large number of shooting and post-production studios, which can facilitate the organization of the production. Shooting in Canada can be very advantageous if a lot of construction is required because the raw materials for construction are inexpensive. In addition, the salaries of Canadian technicians are generally lower than the union minimums in France.

In view of the above, it is clear that collaborations between France and Canada can be considered in the context of film development and production, both cinematographic and audiovisual.

In the context of such international collaborations, it is essential to ensure that the relationships between producers and their partners are effectively managed, whether for the development, production or distribution of works. In order to do so, the use of a specialized firm is strongly recommended to best meet the needs of producers in the establishment and negotiation of contracts.

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