When dwellers of the run-of-the-mill apartment building in Kyiv saw the action genre legend Jean-Claude Van Damme riding a motorcycle in front of their windows, they started screaming and clapping, interrupting the shooting of “The Last Mercenary,” the film he was starring in.
Van Damme and the cast of the movie, released by the U.S. film streaming service Netflix in July this year, spent nearly two months in Kyiv — from August to October 2020 — turning the city into a small Paris, where the plot of the movie is unveiled.
Netflix chose Kyiv for a reason: its run-down buildings on Konstantinovskaya Street resemble poor residential areas in Paris, while swanky Premier Palace and Fairmont Grand hotels in downtown embody a French chic.
The main reason, however, is a refund program from the Ukrainian state. According to the program, the country should reimburse 25% of the money that foreign film studios spend in Ukraine. It includes the salary of local actors and production specialists, the cost of equipment rental and accommodation.
Netflix’s branch in France was the first foreign studio that applied to the program. The budget of “The Last Mercenary” was 3.5 million euros, of which the film crew spent 800,000 euros in Ukraine. It means that the country should compensate Netflix 550,000 euros from the state budget, Forbes Ukraine said.
Netflix, however, has already been waiting for this money for more than 10 months. To get a refund from Ukraine, the company had to go through bureaucratic hell, Forbes reported: it has already prepared nearly 400 documents but lacks one “spravka” – or – certificate from Ukraine’s state registry to finish the process.
Netflix forgives Ukraine this delay, said Yuriy Artemenko, vice president of the Ukrainian production company Star Media, which encouraged Netflix to shoot its film in Ukraine. The U.S. streaming giant understood that it was going to become a pioneer of the cash rebate program in Ukraine, but decided to take a chance anyway.
Apart from Forecast Pictures, a French company that filmed “The Last Mercenary” for Netflix, the filmmakers from India, Israel and China are also interested in the Ukrainian cash rebate, according to Olga Panteleymonova, director at Star Media. Now Ukraine is hurrying to make its system of rebates more convenient for them.
Attractive location
Ukraine-founded film production company Apple Tree Vision spent nearly five years convincing Netflix to come to Ukraine. Like many foreign businesses, the company was afraid to work in the country associated with war and corruption, Artemenko said.
“But when we came to Ukraine, we met many skilled and creative workers here,” said French producer Jean-Charles Levy during the press conference in March. “We even did a production design in Ukraine and everyone was happy about it, including Netflix.”
Ukraine has long been in vogue among foreign producers of movies, commercials and music videos, attracted to the country by its Soviet-esque infrastructure and dystopian monuments. Ukraine also has a diverse nature and many skilled specialists, said Marina Kuderchuk, the head of Ukraine’s Film Agency.
For foreign producers and actors, it is rather easy to get to Kyiv — three hours by plane from London, two and a half from Paris, nearly 10 from New York. Despite the large territory, it only takes 24 hours, tops, to travel by car between the most distant parts of the country.
Among the movies that used the advantages of staging in Ukraine are the French film “Cold Blood,” featuring Jean Reno, the action-thriller film “Transporter 3” and the Chinese action drama “Jackie Chan’s First Strike.
In 2019, the U.S. television network HBO filmed 30% of its mini-series “Chernobyl” in Ukraine. If the country had the reimbursement program at that time, HBO would have shot more scenes in Ukraine, director of the Ukrainian Film Academy Anna Machukh told Forbes.
A scene from a French comedy “The Last Mercenary” taken in Kyiv in the summer of 2020. The film was produced by the international Apple Tree film studio and Ukrainian Vlad Riashyn, a founder of the Ukrainian movie production company Star Media.
Incentive program
The cash rebate program exists in many European countries, including Greece with a 40% refund for filmmakers, the Slovak Republic with a 33% rebate and Estonia offering to reimburse 30% of the production cost.
Foreign filmmakers love to use this program because contrary to other forms of state support, it does not require the transfer of copyrights to the state.
According to the law passed in 2019, Ukraine has to reimburse 25% of production costs for international movie studios if they spent 50% of shooting days in Ukraine, purchased goods and services here, paid salaries for Ukrainian actors and contractors.
Filmmakers can get an additional 5% refund if their movie contains a reference to Ukraine — its history, language or culture.
Experts said that the Ukrainian cash rebate program has many loopholes. For instance, only European filmmakers can receive compensation for filming in Ukraine. Besides, they need to prepare dozens of documents to apply for a refund.
According to the law, Netflix couldn’t count on cash rebates because it’s an American firm. But given that “The Last Mercenary” was filmed by a French company, it was eligible for the program.
According to Kuderchuk, the company cannot receive compensation from Ukraine because it is not registered in the country. To get a refund, a foreign filmmaker has either to provide a certificate confirming that it has a legal entity in Ukraine or wait till the country’s parliament will amend the law that requires it.
The cast of the movie “The Last Mercenary” spent nearly two months in Kyiv — from August to October 2020 — turning the city into a small Paris. The filmmakers even replaced the signs of Ukrainian shops with signs with French names.
Movie business
Ukraine expects that the compensation program would make it more attractive for foreign filmmakers than the neighboring countries like Hungary, Poland and the Czech Republic, which are now in the spotlight of the European film industry due to lucrative incentives from the state.
International projects could bring Ukraine’s movie industry at least $500 million of investment in the next 4-5 years, said Oleksandr Tkachenko, the Ukrainian Minister of Culture.
Next year the Ukrainian government is ready to spend nearly $318 million on Ukrainian culture, including $23 million on the film industry, according to the state budget. This year Ukraine can allocate nearly $1 million for cash rebates, Kuderchuk told the Kyiv Post.
The main goal of the cast rebate program, according to Tkachenko, is to promote Ukraine abroad and encourage foreign filmmakers to produce movies in cooperation with Ukrainian studios.
For that to happen, Ukraine has to invest more in its film industry that in the past few years received minor support from the state. In 2010, for example, the local film industry received nearly $3 million from the state budget compared to over $17 million in 2020.
“Ukraine also needs to promote its movies, provide training for filmmakers and improve its infrastructure in order to create a competitive environment for the local film industry,” Tkachenko said.
The Kyiv Post’s technology coverage is sponsored by Ciklum, ELEKS, Intellias, Intetics, Itera, Parimatch Tech, SimCorp, SoftServe and TECHIIA. The content is independent of the donors.