Protect Your Film’s Incentives: 7 Risks Every Production Should Avoid

Once your production’s creative vision is locked in, picking a filming location often comes down to the numbers: which tax incentive program makes the most sense (and offers the biggest return). Choosing the most lucrative option is an important step every producer takes when figuring out where to shoot next.

Incentives are a core part of film financing, and mismanaging them often results in money lost. For major studios, budget buffers may protect your active project, but incentives mistakes can result in millions lost that could have supported future productions. For independent filmmakers, the stakes are even higher. One error can create cash flow gaps that threaten the viability of your entire project.

What seems like a minor oversight in the moment—perhaps a resident crew member qualification issue, improperly registered vendor, or a missed filing deadline—can snowball quickly. And because incentive rules are complicated, requirements vary widely, and legislation changes frequently, it’s easy to make mistakes.

The good news? Incentives risks can be avoided with the right expertise and systems in place. Here are seven of the most common mistakes productions make with film tax incentives—and how working with Entertainment Partners (EP) can help you avoid them.

7 Costly Film Incentive Risks to Avoid

Risk #1: Leaving money on the table due to gaps in your incentives knowledge

Incentives are the most valuable when you optimize the credits available to you, but this is where many productions stumble.

What can go wrong: Film tax incentives vary widely across jurisdictions, and programs often include hidden bonuses or uplifts. For example, a production shooting in Canada might be aware of the federal and main provincial incentives but overlook regional bonuses that add significant value.

Similarly, states like Montana and Oklahoma offer uplifts or stand-alone incentive programs for VFX or post-production spend, which may require additional tracking during production. And some states, like Louisiana, offer additional local programs which often go unnoticed. These missed opportunities directly affect the bottom line by shrinking available financing.

How to avoid leaving incentive money on the table:

• Thoroughly research, evaluate, and compare available film tax incentives during pre-production.
• Identify regional uplifts, labor bonuses, or post-production credits that align well with your project goals and can stretch your production budget.
• Use EP’s global incentives database to filter by jurisdiction and make sure you don’t miss any qualifying programs.

Knowledge gaps cost real money. Working with the incentives experts at EP gives you full visibility into available programs, helping you make sure your budget is optimized from the start.

Not sure if your incentives plan is airtight? Contact the experts at Entertainment Parters to ensure you maximize every dollar.

Risk #2: Missing deadlines and losing eligibility

Deadlines are one of the strictest—and most unforgiving—parts of incentive management. Even the most well-prepared budgets can collapse if applications aren’t filed on time.

What can go wrong: Most jurisdictions require productions to apply or pre-certify before principal photography or any qualifying spend begins, while others mandate interim filings or progress reports—and incentive programs rarely allow retroactive filings. That means even a small oversight can disqualify an entire production. For example, if a production in California or New Jersey fails to submit an initial application before shooting starts, they could lose eligibility for the entire credit, despite spending millions of dollars in the state.

How to avoid missing incentives deadlines:

• Start the application process as soon as possible, ideally during pre-production, and confirm whether conditional approval or pre-certification is required.
• Map out all deadlines as part of your production incentive management plan.
• Assign responsibility for applications and filings to a specific team member.
• Rely on EP’s pre-production planning services to make sure tax credit compliance timelines are met.

A little pre-planning and organization can help you make sure a missed deadline doesn’t turn into a missed opportunity.

Risk #3: Residency errors resulting in disqualified labor costs

Labor costs make up a significant portion of production spend, and many incentive programs reward hiring local crew. However, residency requirements can vary widely between locations, and it’s easy to misunderstand “qualified local” definitions or miss the fine print on how to verify local hires.

What can go wrong: Some states consider a driver’s license enough proof of residence; others require tax returns, utility bills, or multiple documents to be submitted. A production could end up with disqualified crew salaries or lose bonus percentages if local hires fail to provide sufficient documentation to meet state requirements. This can result in tens or even hundreds of thousands of dollars in disqualified wages from counting toward your credit.

How to avoid making incentives residency errors:

• Collect residency proof (licenses, utility bills, tax filings) during payroll onboarding.
• Track labor paid to residents and non-residents consistently throughout production, and      make sure travel dates are tracked for any unit work that happens in another jurisdiction.
• Use EP’s incentives administration tools for accurate tax credit compliance across the entire crew.

Labor compliance is a detail-heavy process. Without verification and tracking, valuable crew costs may not qualify.

Risk #4: Failing to meet critical program requirements

Every incentive program has eligibility thresholds, and failing to meet them can undermine your financing plan.

What can go wrong: Programs often require a minimum percentage of spend in the jurisdiction, set caps on qualifying costs, or restrict eligibility based on project type. For example, a mid-budget film in Eastern Europe overspent on imported equipment and failed to meet the local spend threshold, resulting in the loss of its entire incentive claim. These rules can make or break your budget if they’re not factored in from the start.

How to avoid failing to meet incentives program requirements:

• Review requirements in advance to align with film budget financing needs.
• Structure budgets strategically to make sure minimum spend thresholds are met.
• Work with EP to confirm all production incentive management requirements are built into the plan.

Eligibility rules aren’t flexible, so it’s important to identify how you’ll meet all your spend thresholds early and affirm that you’re progressing toward your goal once production starts.

Risk #5: Vendors or production spend that are not qualified

It’s easy to assume all production expenses count toward incentive thresholds, but most programs typically exclude certain costs, and not all vendors meet requirements.

What can go wrong: Some incentives programs disallow specific types of spend altogether, and others require vendors to be registered locally. For example, if a UK production uses an out-of-country vendor for post-production without registering them locally, spend with that vendor may be disqualified.

How to avoid losing value due to ineligible incentives spend:

• Confirm vendor eligibility before entering agreements.
• Carefully review qualifying spend categories under local tax credit compliance rules.
• Record all vendor expenses using accurate and detailed information, keeping track of items like invoices, proof of payment, and location-based receipts.

Even minor vendor selection or expense classification errors can add up quickly. Validating both early in your budgeting process helps to protect your budget.

Risk #6: Incentive program policy changes that occur mid-production

Incentive legislation is far from static. Programs evolve constantly, and mid-production changes can leave productions exposed.

What can go wrong: States and countries frequently adjust incentives to stay competitive. This can mean new caps, reduced rebate rates, or sudden rule changes. For example, a jurisdiction in Australia could announce an incentive rate change mid-shoot, leaving productions that are actively filming with only partial incentive coverage, or scrambling to understand if any transitional rules or grandfathering rights may apply. Without a monitoring system in place, it can be easy to miss these changes until it’s too late.

How to avoid getting tripped up by incentives policy changes:

• Continuously monitor legislative updates throughout your production cycle.
• Work with experts who specialize in tracking incentive programs.
• Use EP’s monitoring services to stay informed and proactively adjust plans.

Even if you’ve had experience shooting in a jurisdiction before, incentives programs can shift from production to production. Continuous oversight means you’re never caught off guard.

Your incentives are too valuable to risk. Partner with EP for expert tax credit management and peace of mind from pre-production to audit.

Risk #7: Failing incentive audits due to poor documentation

Proper incentives documentation is the final hurdle in claiming credits—and a common failure point. Even if you’ve met every requirement, you still need audit-ready records to get your money back.

What can go wrong: Auditors verify that every claimed expense is properly supported. Productions with incomplete payroll records, missing invoices, or inadequate residency documentation often see expenses disqualified. It’s possible to lose a significant percentage of your claim if vendor invoices and location-based supporting documentation aren’t collected consistently throughout production.

How to avoid failing an incentives audit:

• Establish record keeping systems before production begins.
• Use trusted digital payroll, accounting tools and secure document storage for reliable, centralized audit support.
• Work with EP for audit-ready tax credit compliance and documentation support.

Audit failures are preventable, and strong documentation helps you recoup every eligible dollar.

Protect your budget by protecting your incentives

Accurate and compliant incentive management safeguards your budget and protects your bottom line. But the risks of mismanagement are real: lost dollars, disqualified spend, failed audits, and unexpected financing gaps.

With EP’s full-service incentive management model, productions are protected with:

• Pre-production planning, including location and incentives comparisons
• Real-time compliance monitoring
• Vendor and payroll validation
• Documentation and audit preparation
• Legislative monitoring

Incentives are a fundamental part of every film's financing plan, and producers can't afford to overlook the details or leave money on the table. Which is why they turn to Entertainment Parters for the best guidance in the industry. EP brings decades of experience and a global perspective, helping productions of all sizes and budgets maximize every eligible dollar and stay compliant at every step.

Ready to simplify incentives management? Reach out to your account manager or contact Entertainment Partners to discuss your project’s needs.

This article contains general information we are providing on a subject that may be of interest to you. Nothing in this article should be considered tax, accounting, or legal advice. You should consult with your own tax, accounting, or legal advisors regarding the applicability of this information to your specific circumstances.