The Basque Country: The tax incentive that has changed the rules of the game

The Basque Country has established itself as one of Europe’s most dynamic audiovisual hubs thanks to a stable, secure and highly competitive tax framework. In this interview, LKS Next Legal examines the key features of an incentive that helped drive nearly 300 shoots in 2025 and is transforming the way audiovisual projects are financed.

What are the main differences between the Basque tax regime and other incentives available in Spain?

LKS Next Legal: The main difference between Spain’s common tax regime and the Basque system lies in the scale and application of the incentive. Under the common regime, the tax credit is 30% on the first €1 million and 25% on any amount above that, and it can only be applied once production has been completed. In the Basque Country, by contrast, the incentive ranges from 35% to 70%, depending on the territory and the characteristics of the production.

Furthermore, the tax credit is generated as expenditure is incurred, improving producers’ cash flow during the shoot, while the geographical scope of eligible expenditure is also more flexible, strengthening the competitiveness of the Basque system.

From your experience advising audiovisual projects, what types of productions are showing the greatest interest in shooting in the Basque Country?

There is a great deal of diversity. At LKS Next Legal, since 2024 we have supported more than 40 projects using tax incentives in the Basque Country. These include, for example, ‘Padre no hay más que uno’ (series), ‘Ya no quedan junglas adonde regresar’ and ‘Un funeral de locos’ (feature films), ‘Iratxoak and Momonsters’ (animation), and ‘La Pasionaria’ (documentary).

Companies do not always understand how a tax-financing operation is structured. What are the most common misconceptions?

One example is assuming that the project’s creative potential is enough. For a tax investor, an audiovisual project is assessed as an investment product and must therefore offer a structure comparable to that of other projects using tax incentives, such as those in the field of R&D and innovation.

The most attractive projects are those that are properly structured: a clear budget, defined timelines, identified guarantees, complete documentation and proper management of all the milestones required to qualify for the incentive, such as obtaining the cultural certificate or depositing the work with the Film Archive.

It is also essential to demonstrate rigour in execution. Producers need to show that they have the necessary resources, management controls and ability to bring the project to completion.

In addition, intangible factors linked to culture are increasingly valued, including connections with CSR policies, ESG criteria and social-impact initiatives.

Beyond the tax savings themselves, what economic impact is the arrival of productions having on the Basque audiovisual industry?

The new regulatory framework is stimulating business investment in the sector while also generating employment, enriching local culture and attracting investment to the region more broadly.

The incentive is becoming a tool that makes it possible to promote higher-level projects while also maintaining a stronger position in terms of ownership of the intellectual property generated by those productions. Ultimately, tax incentives are helping to consolidate the audiovisual sector.

According to Bilbao Bizkaia Film Commission figures, audiovisual activity generated a direct economic impact of €138.11 million in Bizkaia, with the sector’s turnover exceeding €267 million in 2024–2025.

You have been involved in structuring audiovisual financing operations for many years. What services do you provide throughout the process?

At LKS Next Legal, we provide comprehensive support to audiovisual productions, from the initial planning stage through to the effective application of the tax incentive, with the aim of providing legal, tax and financial certainty for all parties involved.

We have a specialised legal, tax and financial team that works in coordination on the analysis and structuring of each project. In the case of production companies, our support begins with an assessment of the project and its specific requirements: we help configure the financial and budgetary model, plan the timely provision of the necessary financing, and ensure the appropriate solvency and participation of investors.

Among other services, we prepare a timetable of the key procedural milestones, define the financing plan on a case-by-case basis, identify both conventional financing requirements and those associated with the tax incentive, and design the most appropriate structure, whether through an AIE (Economic Interest Grouping) or through financing agreements.

We also assist with the full implementation of the structure: bringing investors on board, disbursing funds, closing the transaction and following up on all the necessary procedures, such as obtaining the cultural certificate or recognition of the work’s nationality.

In addition, we provide access to a network of investors and strategic partners, including CREA and other potential sources of bank financing, as well as liaising with public institutions where necessary.

Ultimately, our role is to enable producers to focus on developing the project while relying on a solid, orderly and secure legal and financial structure.

Private financing is playing an increasingly important role in the industry. How can tax incentives coexist with other sources of financing to make more ambitious projects viable?

Not only can they coexist, they need to if we want to structure solid and viable projects. The key is for each source of financing to fulfil its specific timing and economic function within the project’s life cycle.

While the tax incentive can help attract private investment and strengthen the project’s financial capacity, public funding can provide direct subsidies while also reinforcing the confidence of financial institutions.

Alongside these sources, pre-sales to different broadcasters or platforms demonstrate that the project has a commercial outlet and can also be used to obtain financing through the discounting of contracts.

Looking ahead, how sustainable do you expect this system to be in the Basque Country before there is a risk of saturation through repeated locations or subject matter? What trends do you anticipate over the coming years?

The outlook is promising, because the tools currently being developed will help move the sector towards greater consolidation.

There is undoubtedly a risk of saturation, and the industry is already experiencing pressure on available resources, including a shortage of qualified crews and increased demand on ancillary services. However, as in any market experiencing excess demand, an adjustment will eventually take place that will favour higher-quality projects.

The Basque Country’s tax incentives have EU approval until 2028, and no substantial changes are currently expected after that date. The trend points towards consolidating the arrival of productions thanks to an increasingly competitive framework.

The challenge will be to maintain that appeal not only through the tax incentive itself, but also through reduced bureaucracy, a financial sector aligned with the industry’s needs, and the continued development of technical and creative talent.

What financing options are available to technical service companies seeking to develop their business in the Basque Country?

Technical service companies have access to an ecosystem of support measures that enables them to grow with greater autonomy. Tax incentives encourage productions to hire local suppliers, while public funding for innovation and the growing presence of investment funds and venture capital are opening up new financing opportunities for the sector’s supporting industries. 

Tax incentives and other sources of financing can not only coexist; they need to if we want to structure solid and viable audiovisual projects.