Former Minister of Culture Rein Lang (Reform) criticized Estonia's Film Estonia rebate fund in an interview with Õhtuleht on Saturday, questioning the benefits Estonia has received from what he called "a massive pile of money" paid back to corporations producing films in the country.

"This is simply bad fiscal policy!" Lang said, referring to the rebate fund, which offers a 30 percent cash incentive to film production companies working in Estonia.

However, Indrek Ibrus, professor of media innovation at Tallinn University, disagrees with Lang's critique.

"Lang's criticism is not justified," said Ibrus. "His question was: what has Estonian film gained from the rebate fund? The answer is simple: the fund is needed for two broad reasons. Firstly, it allows Estonian film professionals to work on major international productions. If they only worked on low-budget Estonian films, they would not develop into contemporary professionals, and in the long run, Estonian film would lose all hope of survival," he explained.

According to Ibrus, the rebate fund gives local filmmakers the opportunity to participate in the global industry.

"We know that relationships established through service projects have led to new opportunities. Secondly, it allows Estonian film production companies to grow into strong, sustainable firms. If Estonian producers only worked on Estonian films, they would remain as they were 15 years ago – unable to shoulder the burden of Estonian film. They need to generate additional revenue by providing services," Ibrus added.

Currently, Denmark is the only European country that does not offer such incentives, Ibrus noted.

"This is because Danish films are largely self-funded, and that is sufficient for their development. Additionally, they have received many international co-production orders recently and don't need anything extra," Ibrus said.

While the 30 percent rebate is relatively standard, some countries offer higher incentives, such as 35 percent, Ibrus pointed out. He also suggested that Estonia might consider a slight reduction in the rebate.

"Ten years ago, when Estonia's rebate fund was established, 30 percent was one of the highest rates. Since Estonia was one of the last countries to adopt such a scheme and its film industry was relatively unknown, it made sense to set a high rate. But now, we could discuss reducing it to, for example, 25 percent. However, it can't be lowered much further," Ibrus said.

Karlo Funk, adviser for audiovisual and digital culture at the Ministry of Culture, shares a similar view. He argued that such measures bring revenue into the country rather than taking money out.

"Tenerife is considering raising its rebate percentage to 45 percent. There is a broad economic consensus in the European film industry that this money returns to the national economy, as confirmed by multiple analyses," Funk said.

Funk also acknowledged the question of whether this measure benefits Estonian film directly.

"Looking at the budget situation, production support for Estonian films will not double or triple in the near future. The rebate fund can bring funding to Estonian films and provide work for film industry professionals. The percentage of the rebate depends on how much Estonian film professionals are used," Funk explained.

He added that interest in filming in Estonia could grow if a film pavilion is built in the country.

"A lower rebate percentage would harm film production. If other Baltic countries offer higher rebate percentages and have cheaper production conditions, these projects simply won't come to Estonia. This has already happened," Funk noted.

Director: The entire sector could benefit

Film director and screenwriter Andres Maimik believes that Estonia's film rebate fund does not benefit him as a local filmmaker.

"Technical staff get work and a paycheck from these projects, but there's no benefit for directors like me because we are not involved in these productions. And the rebate fund doesn't apply to Estonian films – they still have to pay all their taxes in full," Maimik said.

"I understand that this stimulates the sector economically, but the downside is that wages and prices for various roles have gone up, making filmmaking more expensive. Creative personnel don't gain anything from this," he explained.

Maimik also expressed frustration that, when he works on his own projects, many crew members are occupied with foreign productions.

"I wouldn't say I feel a great sense of injustice hanging over me, but my opinion is that the money should circulate within the sector rather than going entirely to wages. If support increased, I wouldn't oppose it. But as long as the rebate fund is used only to facilitate foreign projects with Estonian teams, I don't see any personal benefit. In fact, it makes my work more inconvenient," Maimik said.

He added that the working culture on film sets has become more international. "Vocabulary and other practices have been adopted from foreign crews. But what's the benefit of that? Talented people could develop their skills without these projects," he said.

"There are now strict rates comparable to those of big Hollywood productions, which makes local filmmaking costly. Support doesn't rise as quickly as people's demands," Maimik noted.

The film rebate fund is one of the few areas in the Ministry of Culture's budget that will not face cuts in 2025. In 2024, Film Estonia, the organization managing the rebate program, had a total budget of €6 million, which will remain unchanged next year.

In 2023, the Estonian Film Industry Cluster, representing Estonian production companies, issued a statement warning that unless the fund's budget is increased to €8 million, Estonia risks losing significant international film projects.

A 2022 study on the economic impact of Film Estonia revealed that every euro paid out by the rebate fund returns five euros to Estonia's economy. In 2021, the rebate program generated €16.7 million in revenue, created 189 jobs and brought in €2.7 million in tax revenue for the state.

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