EU approves Italian tax incentives to film industry


June 18, 2010 Updated Jul 23, 2009 at 1:12 PM EDT

The European Commission approved Thursday a package of tax incentives that Italy wants to introduce to bolster investment in the film industry.

However the commission, which polices competition issues in the 27-nation EU, announced an investigation into a tax credit for digital projection equipment which it suspects would mainly benefit big cinema chains.

The tax incentives -- worth 82 million euros (117 million dollars) -- are aimed at encouraging businesses outside the film sector and distributors within it to invest in European cultural films.

"The incentives aim to stimulate investment from outside the film production sector into European cultural films and to support the distribution of such films," a statement said.

The probe concerned a proposed 30 percent tax credit for installing digital projection equipment in Italian cinemas. Brussels fears the measure may mainly benefit large multiplexes which should need less support.

By opening the in-depth investigation, the commission allows interested third parties such as small cinemas to comment on the proposed tax measure.

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