Uwe Boll

Now there’s a name I haven’t heard in ages. I was wondering how he managed to make so many movies, and apparently it was due to some sort of German tax loophole:

Hollywood has a long history of sourcing international investors for projects. Often you will find that filming in a certain country offers incentives and tax breaks not offered in the US. Usually though, you’ll find that in order to be entitled to them, you have to meet certain conditions, for example filming in that particular country and/or employing a certain percentage of native workers as your film crew. Germany has these incentives but, crucially, no such restrictive requirements put upon them. Germans can fund your movie and you can make it wherever and however you like.

But crucially, the bizarre tax laws in Germany mean that any wealthy Germans who invest in a movie can write-off the production cost, delay paying their taxes and generally reduce their tax burden. When you disseminate all the boring legal business law surrounding it the bottom line is this – the German investors in a movie only pay tax on any RETURNS the movie makes, their investment is 100% deductible, so the minute the movie makes a profit, said investor has to start paying tax. Plus the investors can actually borrow money to put towards investment and write that off too. Assuming you’re a sharp enough businessman you have a potential goldmine in the making; a way to make money from investing in bad movies…

I don’t follow the scheme 100%. I get that, for his German investors, if their investment is less than or equal to their tax burden, they basically break even since the investment loss offsets their taxes. But even so, in the case of investing in a Boll production, isn’t that a major opportunity cost? It’s sort of like letting your money sit in a no-interest savings account and losing money to inflation when you could be investing in something that actually makes money. Is it more that German investors were much less scrupulous in investing in movies because the risk was much lower, and since the “losses” weren’t so bad he wouldn’t get blackballed among German investors? Or do those investors actually profit from the scheme as well?

On the Hollywood end, do they just not care as long as the money is put up? I would think there’s still the issue of opportunity cost, with his movies taking the place of potentially more profitable productions, but maybe I underestimate the power of corporate accounting. I imagine Boll still must have quickly developed a reputation, so the actors he got would either take any job for a check or didn’t have good agents.