# Why Productions Shoot Overseas: Film Tax Incentives and Real Costs

Source: https://storiara.com/blog/tax-incentives-and-global-film-production-why-shoot-overseas
Last updated: 2026-09-14
Author: Spencer Kaufman, Storiara

> Productions shoot overseas when a country's incentive, crew base, and stages leave a lower net cost than shooting at home. The UK pays 34% of qualifying spend (taxable), Ontario stacks 21.5% of Ontario spend with a 16% federal labour credit, and Australia pays 30% above A$20 million. The saving only holds once travel, housing, per diem, visas, and local payroll are counted against it.

A script that says "EXT. BROOKLYN BRIDGE - NIGHT" on page one does not tell you where the show will shoot. The finance plan does. For most studio features and a growing share of streaming series, the first budgeting question is which jurisdiction returns the most money on the spend, and whether that jurisdiction can hold the show.

This guide is for the producer or line producer running that comparison. It covers what the main foreign programs pay, how their rules change the real percentage, the costs that eat into the saving, and a worked comparison of a $20 million feature in Georgia, the UK, and Ontario.

## What changed the math

US states have offered production incentives for decades, and so have many countries. What pushes a US show abroad is usually a combination of three things.

The first is the rate on the spend that qualifies. A 30% credit on 60% of the budget is worth less than a 25% credit on 90% of it, so the headline number only matters once you know the base it applies to. The [qualified spend](https://storiara.com/glossary/qualified-spend) rules are where programs really differ.

The second is capacity. A country with a big incentive and two small stages can't take a series that needs six stages for eight months. The UK, Canada, Australia, and New Zealand all have large studio facilities and crews that have worked on US studio shows for years, which lets a production bring a handful of department heads and hire the rest locally.

The third is what the credit is worth in cash and when it arrives. A refundable credit paid by the government after audit, a credit you sell to a broker at a discount, and a taxable credit that shrinks after corporation tax all show up differently in the cash flow. Our post on [rebates versus tax credits](https://storiara.com/blog/film-rebates-vs-tax-credits-which-one-is-best-for-your-production) covers those mechanics in detail.

## The main programs US productions compare

The table below uses the official program pages listed in the sources. Rates change, so treat this as a starting point and confirm on each [incentives page](https://storiara.com/incentives) before you lock a budget.

| Jurisdiction | Program | Headline rate | What it pays on | Minimum |
|---|---|---|---|---|
| [United Kingdom](https://storiara.com/incentives/united-kingdom) | Audio-Visual Expenditure Credit (AVEC) | 34% film and high-end TV; 53% independent films | Lower of UK core costs or 80% of total core costs | 10% of core costs in the UK; HETV averages £1m per hour |
| [Canada](https://storiara.com/incentives/canada), federal | Production Services Tax Credit (PSTC) | 16% | Qualified Canadian labour, net of assistance | CAD 1m total cost for features |
| Ontario | Ontario Production Services Tax Credit (OPSTC) | 21.5% | Ontario labour, service contracts, and goods | CAD 1m; Ontario labour at least 25% of claimed spend |
| British Columbia | BC Production Services Tax Credit | 36% | Accredited BC labour only | See Creative BC |
| [Ireland](https://storiara.com/incentives/ireland) | Section 481 | 32%; 40% under the Scéal Uplift | Lowest of Irish eligible spend, 80% of total cost, or €125m | €250,000 total cost |
| [Australia](https://storiara.com/incentives/australia) | Location Offset | 30% | Qualifying Australian production expenditure (QAPE) | A$20m QAPE |
| [New Zealand](https://storiara.com/incentives/new-zealand) | NZSPR for international productions | 20%, plus a 5% uplift | Qualifying NZ production expenditure | NZ$4m (NZ$20m for the uplift) |

For comparison at home, [Georgia](https://storiara.com/incentives/us/georgia) pays a 20% transferable credit plus a 10% promotional uplift with a $500,000 minimum, and states like [New Mexico](https://storiara.com/incentives/us/new-mexico) and [Louisiana](https://storiara.com/incentives/us/louisiana) sit in the same range with different caps and resident labor rules. Our ranking of [the best states for film tax incentives](https://storiara.com/blog/best-states-for-film-tax-incentives) goes through the US side.

A few details in that table move the real number more than the headline does.

The UK credit is taxed. HMRC taxes AVEC at the main corporation tax rate, which is 25%, so 34% becomes about 25.5% in the production company's hands. The 80% cap means that even a show spending everything in the UK claims on four fifths of core costs at most.

Canada's credits interact. The CRA treats provincial credits as assistance, and assistance reduces the labour base before the 16% federal credit is calculated. You can't add 21.5% and 16% and call it 37.5%.

British Columbia pays only on BC labour. A show with heavy equipment, set construction materials, and stage rent does better in Ontario or Quebec, which pay on a broader base. A labour-heavy series often does better in BC.

Australia and New Zealand set high floors. The Location Offset starts at A$20 million of Australian spend, which rules out most independent features unless they qualify as Australian productions. New Zealand dropped its live action minimum from NZ$15 million to NZ$4 million for productions starting on or after 1 January 2026, which opens it to smaller shows than before.

## Where the money actually went: productions you can check

The examples below come from production records you can verify. They show the pattern of where large US projects have landed.

HBO's *The Last of Us* shot its first season across Alberta, in Calgary, High River, Fort Macleod, Edmonton, Canmore, and Waterton Lakes, then moved to British Columbia for season two. *Game of Thrones* was built around studios in Belfast, Northern Ireland, with Dubrovnik in Croatia standing in for King's Landing and further units in Iceland, Malta, Spain, and Morocco.

Warner Bros. shot *Barbie* at Warner Bros. Studios Leavesden in England, with a short location shoot at Venice Beach in Los Angeles. *Avatar: The Way of Water* did its main live action work in Wellington, New Zealand, under an agreement that required at least NZ$500 million of New Zealand production spend.

Australia's own incentive brochure lists *The Fall Guy*, *Anyone But You*, *Kingdom of the Planet of the Apes*, *Godzilla x Kong: The New Empire*, and *Ticket to Paradise* among productions filmed there with federal and state incentives. *Ticket to Paradise* is set in Bali and was shot in Queensland. That kind of stand-in is its own craft, which we cover in [doubling locations](https://storiara.com/blog/doubling-locations-how-georgia-and-new-zealand-become-new-york-and-the-moon).

## The costs that eat the saving

An incentive comparison that stops at the credit is only half done. Shooting abroad adds lines that a domestic budget either doesn't have or carries at a much smaller size.

### Moving and housing the people you bring

Even a show that hires 90% of its crew locally usually brings the director, producers, cast, the DP, the production designer, and often a 1st AD and a VFX supervisor. Each of those people needs flights (often business class under their deals), housing for prep and shoot, a car, and a [per diem](https://storiara.com/glossary/per-diem). A cast deal might also include a first-class flight for a companion and a specific housing standard.

Each program defines local spend in its own way, and travel is where definitions tend to bite. Rent paid to a local landlord is local spend in most programs, while an international flight often sits partly or wholly outside the base. Read the program's rules before assuming a $600,000 travel and living line earns anything back.

### Union obligations travel with the talent

SAG-AFTRA's Global Rule One says members may only work for producers who have signed a SAG-AFTRA agreement, and it applies anywhere in the world. A US studio shooting in London with American leads is still signatory for those performers, which brings pension and health contributions and residuals obligations that sit on top of the local payroll. DGA and WGA deals for the director and writer follow the same logic. Our guide to [SAG-AFTRA](https://storiara.com/glossary/sag-aftra) covers the domestic agreements in more detail.

### Visas and work permits

Every foreign cast and crew member needs the right to work. In the UK, a Creative Worker visa requires a certificate of sponsorship from a licensed sponsor, costs £340 per application plus the immigration health surcharge, and allows a stay of up to 12 months or the length of the sponsorship plus 28 days, whichever is shorter. Build the lead time into prep. A decision takes about three weeks when applying from outside the UK, and a department head who can't start prep on time costs more than the fee.

### Local payroll, withholding, and the entity

To claim most foreign credits you set up a local production company, usually a single-purpose company for one project. That means a local production accountant, a local payroll company, local employer contributions, and an audit at the end. Non-resident talent may face withholding on fees earned in the country, and some programs require withholding on loan-out payments. Even domestic programs do this: Georgia requires productions to register for a loan-out withholding account.

### Currency

The credit arrives in pounds, Canadian dollars, or Australian dollars, often 12 to 24 months after the money was spent. If the budget is financed in US dollars and the local currency falls, the rebate is worth less when it lands. Accountants hedge part of that exposure or buy currency forward once the budget locks. Programs also have rules for converting foreign-currency spend. Screen Australia, for instance, tests its QAPE threshold using the exchange rate on the day principal photography starts, and calculates the final offset on the average rate over the period the spend was incurred.

## Worked example: a $20 million feature in three places

Here is a simplified comparison for a contemporary drama with a $20 million all-in budget. The numbers are illustrative and every assumption is stated, so you can swap in your own. All figures are in US dollars at a flat exchange rate to keep the arithmetic visible.

Assumptions shared by all three:

- $2.5 million of the budget is above-the-line fees paid to US-based cast, director, and producers.
- $1.5 million is financing, insurance, legal, and contingency that no program counts.
- Local spend is what remains after those two items and travel: about $15 million in each case.

### Georgia

Georgia's credit is 20% plus the 10% uplift for including the Georgia promotional logo. Assume $15.5 million qualifies, since there's less travel.

- Credit: $15,500,000 x 30% = $4,650,000
- The production has no Georgia tax bill, so it sells the credit. At an assumed 90 cents on the dollar: $4,650,000 x 0.90 = $4,185,000
- Less the Department of Revenue audit fee for a production over $10 million: $25,000
- Net benefit: about $4,160,000

Travel and living for a handful of LA-based principals: assume $250,000.

Net cost: $20,000,000 - $4,160,000 = $15,840,000, with $250,000 of travel already inside the $20 million.

### United Kingdom

Assume total core costs of $17 million (the budget minus financing, insurance, and similar costs) and $15 million of UK core spend.

- 80% of total core costs: $17,000,000 x 80% = $13,600,000
- UK core costs: $15,000,000
- Qualifying expenditure is the lower figure: $13,600,000
- AVEC: $13,600,000 x 34% = $4,624,000
- Corporation tax at 25% on the credit: $1,156,000
- Net benefit: $3,468,000

Travel, housing, per diem, and visas for 14 US principals over a 12-week prep and shoot: assume $700,000, more than Georgia because of international flights and longer housing.

Net cost: $20,000,000 - $3,468,000 = $16,532,000, with $450,000 more travel inside the budget than the Georgia version.

### Ontario

Assume $15 million of qualifying Ontario spend, of which $8 million is Ontario labour.

- OPSTC: $15,000,000 x 21.5% = $3,225,000
- Federal PSTC base: Ontario labour minus provincial assistance. As a simple, conservative version, take the whole provincial credit off labour: $8,000,000 - $3,225,000 = $4,775,000
- PSTC: $4,775,000 x 16% = $764,000
- Net benefit: $3,989,000

Travel and living: assume $500,000.

Net cost: $20,000,000 - $3,989,000 = $16,011,000.

### What the comparison shows

| | Georgia | UK | Ontario |
|---|---|---|---|
| Net incentive | $4,160,000 | $3,468,000 | $3,989,000 |
| Travel and living (inside budget) | $250,000 | $700,000 | $500,000 |
| Net cost | $15,840,000 | $16,532,000 | $16,011,000 |

On these assumptions Georgia wins, and Ontario is close. The UK looks worse here, but change one assumption and it moves. If the film has a UK writer and director (or is an official co-production) and core costs of £15 million or less, the 53% Independent Film Tax Credit applies and the UK jumps to the top. A VFX-heavy picture changes it again, because UK VFX costs claim 39% outside the 80% cap, though a film can't take both the independent rate and the VFX rate. And if Georgia's credit sells at 85 cents instead of 90, Georgia loses about $230,000.

Because small assumptions swing the result by hundreds of thousands of dollars, line producers run the comparison on the real budget. Our [incentive calculator](https://storiara.com/tools/incentive-calculator) lets you enter spend by jurisdiction and see the gross credit before you build the detailed version.

## Culture tests, treaties, and content rules

Several countries only pay if the project meets a cultural or content test. The BFI's cultural test for film asks for 18 of 35 points across cultural content, contribution, hubs, and practitioners. A US studio film can pass on hubs and practitioners by shooting and posting in the UK with UK crew, even when the story isn't British. Our guide to [the cultural test](https://storiara.com/blog/the-cultural-test-how-to-qualify-for-international-film-incentives) walks through how productions score those points.

A [co-production treaty](https://storiara.com/glossary/co-production-treaty) is a different route. Under an official co-production, the project counts as a national production in each partner country, so each producer can reach its home incentives. Australia's brochure says most of its treaties expect each partner to put in at least 20% of the finance and creative contribution, and it lists treaty partners including Canada, France, Germany, Ireland, New Zealand, and the UK. The US has no film co-production treaties, so a US producer joins through a partner company in a treaty country.

## How to run the decision

Line producers who do this often follow roughly the same order.

1. Build a jurisdiction-neutral budget first, with every line coded so you can see labour, goods, and services separately.
2. List the jurisdictions that can physically hold the show: stage size, crew depth for the number of units, and locations that can read as the script's settings.
3. For each one, mark which lines qualify, apply the rate, and apply caps, taxation, and discounts on sale.
4. Add the lines that only exist abroad: travel, housing, per diem, visas, local accounting and audit, and currency hedging.
5. Check timing. When does the credit pay, and what does it cost to finance the gap until it does?
6. Read the program rules for anything that could disqualify you, such as a cultural test, a resident hire ratio, or a sunset date.

Storiara's Funding module can help with a first pass. It checks a project's locations, scheduled shoot days, and budget against a built-in list of about 104 incentive programs in 21 countries and estimates a value you can apply to the budget. It assumes 60% of the budget qualifies and doesn't apply caps or uplifts, so treat the result as a screen and confirm the numbers with the film office and your accountant.

## Frequently asked questions

### Why do so many American movies film in the UK and Canada?

Both have large incentive programs with no annual cap on the main credits, deep crew bases, and stage space built for studio work. The UK pays 34% on qualifying core spend and Canada stacks a 16% federal labour credit with provincial credits such as Ontario's 21.5% or British Columbia's 36% of BC labour.

### Is it cheaper to shoot a film in the UK or in Georgia?

It depends on how much of the budget qualifies and what you pay to move people. Georgia's credit is up to 30% but is usually sold at a discount, while the UK's 34% is taxed, leaving 25.5%. On a $20 million feature the two can land close together, and travel and housing often decide it.

### Do SAG-AFTRA rules apply when shooting overseas?

Yes. Under SAG-AFTRA's Global Rule One, members can only work for producers who have signed a SAG-AFTRA agreement, wherever in the world the job is. A US production that hires members abroad still needs a SAG-AFTRA agreement in place.

### Can you combine incentives from two countries?

Only by spending in both, or through an official co-production under a treaty. Each country pays on spend inside its own borders. An official co-production can let each partner's producer access its home incentive, but the treaty sets minimum financial and creative shares.

### How do exchange rates affect a foreign incentive?

The credit is paid in local currency, and budgets are usually financed in dollars. If the local currency weakens between greenlight and payout, the dollar value of the rebate falls. Australia converts foreign-currency spend at the rate on the first day of principal photography for its threshold test.

## Sources

- [HMRC: Claim Audio-Visual Expenditure Credits for Corporation Tax](https://www.gov.uk/guidance/claim-audio-visual-expenditure-credits-for-corporation-tax)
- [HMRC: Additional tax relief for visual effects (VFX)](https://www.gov.uk/government/publications/corporation-tax-additional-tax-credit-for-visual-effects-vfx-expenditure/additional-tax-relief-for-visual-effects-vfx)
- [HM Treasury: Additional support for independent film](https://www.gov.uk/government/publications/corporation-tax-tax-relief-for-independent-film-productions/additional-support-for-independent-film)
- [Georgia Department of Revenue: Required mandatory film tax credit audit and fees](https://dor.georgia.gov/required-mandatory-film-tax-credit-audit-fees)
- [BFI: Cultural test for film](https://www.bfi.org.uk/apply-british-certification-tax-relief/cultural-test-film)
- [GOV.UK: Creative Worker visa](https://www.gov.uk/creative-worker-visa)
- [Ontario Creates: Ontario Production Services Tax Credit](https://www.ontariocreates.ca/tax-incentives/opstc)
- [Province of British Columbia: Production services tax credit](https://www2.gov.bc.ca/gov/content/taxes/income-taxes/corporate/credits/production-services)
- [Screen Australia and Ausfilm: Australia incentives brochure (February 2026)](https://www.screenaustralia.gov.au/wp-content/uploads/2026/02/Incentives-Brochure-English.pdf)
- [Screen Australia: Producer Offset FAQs (updated July 2026)](https://www.screenaustralia.gov.au/wp-content/uploads/2025/08/Producer-Offset-FAQs.pdf)
- [New Zealand Film Commission: Rebate for international productions (NZSPR)](https://www.nzfilm.co.nz/incentives/rebate-international-nzspr)
- [Georgia Department of Economic Development: Production incentives](https://www.georgia.org/industries/film-entertainment/georgia-film-tv-production/production-incentives)