In Italian cinema public aid is worth 37 per cent of production: a company's margin must also be read without the grants
6 October 2026, 09:42
On 29 September the Italian Ministry of Culture sent Parliament its annual report on the effects of Law 220 of 2016, the law on cinema and audiovisual production, covering 2025. Its purpose is to measure what public aid to the sector actually achieves. Il Sole 24 Ore wrote about it today, starting from the most visible figure: in 2025 the resources awarded through the four main schemes fell to €477.6 million, from €656.6 million in 2024. Almost all of the 27.2 per cent drop comes from the tax credit granted to those who produce films and series.
For the smallest film companies, aid is worth more than three quarters of production
The figure that matters sits a few pages further into the report, which lined up the accounts of the film and audiovisual companies that received aid between 2018 and 2025. For these companies, grants are worth on average about 37 per cent of the value of production, that is the year's revenues plus the other operating items, grants included. For the smallest ones they reach 77 per cent.
The average operating result of these businesses is positive, at around 7 per cent of production. Then the report does the sum that changes the picture: once grants are removed, the result becomes "systematically negative", on average minus 32.8 per cent of production, and around minus 76 for the smallest companies.
In plain terms: for a good share of these businesses the margin does not come from customers. It comes from a law. The report says so without beating about the bush: grants are "an essential component of the economic and financial balance" of the subsidised companies, "above all in the most fragile part of the production system".
The grant enters the profit and loss account among revenues, and lifts the margin
The mechanism is not confined to cinema. Article 2425 of the Italian Civil Code, which sets out the layout of the profit and loss account, places operating grants under item A5, "other revenues and income", within the value of production. Under the Italian accounting standard OIC 12, these are the grants that supplement the revenues of the business or reduce the year's expenses. That is where, for example, the 2022 energy tax credits ended up. The same item A5, though not among operating grants, may also include part of the capital grants received to buy machinery. They pay for an investment, not for the year's expenses: under OIC 16 the grant can either reduce the cost of the machine or be taken to revenue a piece at a time, alongside the asset's depreciation.
Because they sit within the value of production, grants flow straight into EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization), the gross operating margin before depreciation, interest and taxes: one of the first numbers a bank looks at. A company can thus present a healthy EBITDA that, once the aid is taken out, tells a different story. The Civil Code requires grants to be shown separately, and that separate line is what makes it possible to take them out.
A margin that depends on a law is measured twice
A grant is a peculiar kind of revenue: no customer decides it, and it is not renewed because the product is good. It lasts as long as the rule that provides it, which any budget can change. Cinema has just seen it happen: in one year, approved tax credit applications went from 888 to 527.
It is like deciding that the mortgage instalment on the house can be paid by counting the envelope the grandparents give every Christmas. The instalment gets paid as long as the envelope arrives, and nobody in the family can say any more whether the salary alone would be enough.
That is why the margin is read twice, with grants and without. The first number tells how the year went. The second says whether the business stands up on its customers alone, and it is the one on which prices, hiring and investments meant to outlast the grant are decided. If the gap between the two readings is small, the aid remains aid. If it is large, it has become part of the way the business makes money, with an end date written into a law.
That expiry date should be looked for before signing a commitment that lasts longer. A tax credit tied to a single year, a call for applications that closes, a measure renewed from one budget law to the next: each carries its own deadline inside the margin. The cinema report shows this for an entire sector. Item A5, in the accounts of any company, shows it for a single one.
The margin that counts is the one left when the law changes.
This article was prompted by a news item published in Il Sole 24 Ore on 6 October 2026.