The Challenges of Filming in a Foreign Country
Every time you film in a foreign country, you have to set up a legal entity in that jurisdiction. This doesn’t take hours or days to set up. This takes weeks.
You also need the proper permits to collect and pay taxes. Tax structures are different all over the world. In the United States, we pay a sales tax at the local and state level, as well as payroll tax at the federal and state level. You have to pay VAT in the European Union’s jurisdiction and GST in Canada and Australia.
This is a big “don’t know what you don’t know” kind of problem. What seems reasonable could be totally illegal in another country, especially if you’re filming somewhere with cultural values different than your own.
Creating a proper legal entity, getting permit for the crew to work, and going through whatever process is necessary to collect and remit taxes takes more time than you’d think. There’s always another form to file and hoop to jump through. Bureaucratic bullshit, you know?
Some people say you can do all this in six weeks, but I recommend giving yourself at least 8 to 12 weeks to get your ducks in a row before you show up in an airport.
This is not an area where you want to be cheap. Hire a lawyer who knows the area well. You want a big, local law firm who knows how to get you the right permits wherever you’re going to film. This service will run you $2,500 to $3,000 and it can go higher depending on your needs and your location.
If you don’t use lawyers often, it may seem like this kind of service costs a lot of money. But the cost of hiring an attorney to set you up in a new country is basically a rounding error on your budget. They’ll protect you from a bunch of problems you just need on your plate.
After setting up your legal entity, the next problem you’ll have in a foreign country is spending your money. You may have a giant production budget, but it won’t help if you can’t spend it in the local currency.
So you have to exchange it. Currency conversion is a popular way to commit fraud and money laundering, which is why the Dodd Frank Act regulates the hell out of it. Exchanging money takes time. Almost as long as setting up your company, so you have to start this process as soon as you have a budget to spend.
There are three mechanisms to exchange currency:
- Market trading. This is the cheapest way to exchange currency, but it’s also a fantastic way to lose a shit load of money. Don’t do this. You will get fucked at every single turn. Tiny decimals turn into real dollars real fast.
- Through a bank. This is reliable and simple, but they charge a lot. This could cost 100 basis points. I’ve seen even more.
- Through a currency conversion house. This is the middle ground that most production companies go with. They charge for their services, but not as much as a bank, and they have tools to structure the exchange so you don’t get screwed by volatility over time. It’s far safer than trading against the daily volatility of market swings yourself.
The cost to convert currency depends on the price the day you exchange (usually the day you get the green light to produce the film). The exchange rate is the number we use to determine whether we’re making money or losing money in the exchange.
The cost of a conversion is never the same. It changes a lot, even in a single day. it depends on the spread between the two currencies, commissions to whichever mechanism processes the transaction, and forward points (if applicable).
The markets are exceptionally volatile these days. Where it used to take months for some currencies to change 10 to 20 basis points, they can now change that much in just a few hours and even 100 basis points in a few days. A single penny change ($.0100 or 100 basis points) is a lot of money. On a $2 million-dollar budget, 100 basis points is $20,000.
When you’re ready to exchange currency, you basically have three options. First, you can do a straight exchange. You buy the local currency with U.S. dollars. Put it in an interest bearing account that few people can access. Dole it out weekly for production expenses.
Second, you can buy forwards. A forward is when you lock in a rate over a period of time. If you buy $2 million in forwards, you might send them $200,000 or $400,000 per week to exchange.
Third, you swap forwards. This is a complex process that sometimes makes my brain melt (and I do $20-$20 million in currency exchange every year). It’s for when you’ll need to bring some currency back to the states after production, like a tax incentive. You lock in the rate so what you pay taking the money out is the same as it cost to put in. Sometimes this works in your favor and sometimes it doesn’t, but it’s predictable.
That barely begins to scratch the surface of the complexity foreign currency trading. There are countless variables to consider. In regards to forwards and swaps, you also have to evaluate…
- Credit – The conversion house will need to provide you with credit to settle your balance every day. They’ll charge interest for that and need you to put up cash, cash equivalents or collateral to secure the transaction.
- Interest – Depending on which side of the transaction you are on you may have to pay interest or you may earn interest. Interest is pennies but turns out to be a lot of money at scale.
- Timing – You can buy forwards for about nine months. If you need more time, you can roll one forward into another. The further out you go, the more interest and forward points you’ll have to pay.
- Mark-to-market – When you roll a forward into another, you have to pay (or receive) the mark-to-market difference. This is the difference of what you paid for currency in the beginning and what it’s worth when you roll out to a later date. You may pay or you may get paid. It just depends on how the currency pair has moved over time.
As you can see, foreign currency trading is absurdly complex. If you don’t have a lot of high finance or trading experience, you will most likely get screwed.
Anyone who travels with the production needs a permit to work in the foreign jurisdiction. Requirements vary all over the world, but there’s always some mechanism that lets some crew and above-the-line people work locally. If you don’t have a work permit, you’re violating the law.
The United States’ Visa system works the same way. If you’re caught working without a permit, you can be detained for who-knows-how-long (effectively screwing your shooting schedule) and even prosecuted.
In many places, leaving briefly and returning is enough to fool customs…once. They will notice if you leave the country every 90 days just to get the passport stamp.
(Unless you try to bribe the customs officials. It happens a lot, but I do not recommend it.)
In some cases, I have worked in countries without a work permit, but only because I didn’t intend to be there long. This can work, and getting caught is unlikely (especially if you’ll only be in the country for a week), but I don’t think this strategy is worth it. Just get the damn permit.
Again, rely on your lawyer here. Trying to do it yourself is a great way to miss something and get kicked out of the country mid-shoot.
The United States basically invented modern film production. The rest of the world mirrors our systems and processes, except for some slight nuances.
But those little nuances can be big deals when you’re in their country.
For instance, if you film in United Kingdom, you better plan on taking a break in the afternoon. They won’t abandon your production if you deprive them of their tea time, but they might stop giving a shit about your film. In Spain, the break can last a couple hours.
The regulatory environment is unique in France. They hire a lot of people and it’s really fucking hard to fire someone. You need documentation of poor performance before you can kick someone off your set. And you’ll probably pay a severance.
Why are grips and electrics different jobs in the US? Because the unions say so. But they could be the same person in Europe because they don’t see the distinction there. (Honestly, the distinction is pretty much bullshit anyway.)
Here’s another cultural oddity. In the US, some union requirements spread to non-union projects. The script supervisor is a good example. Directors have become used to having a script supervisor, so they demand one on non-union jobs. This isn’t the case in other places of the world. Many projects just don’t have one.
Here’s a big challenge that doesn’t exist in other industries. This is one of the reasons filmmaking costs so much.
When you bring goods into other countries, you usually pay an import duty. A Carnet is an international customs document that lets you skip duties and taxes in many countries as long as you’ll take the goods back with you when you leave. This means you can bring your props, cameras, wardrobe, and other equipment into a foreign country without spending a shit load of money in entry or exit duties.
The challenge here is that you have to remove the items from the country in the same condition you brought them in. They have to go in and come out in the exact same form. You can make some changes like painting or adding embellishments, but you can’t assemble them or take them apart to sell.
A Carnet doesn’t let you avoid all cost, however. Moving shit across borders is a lot tougher since 9/11. A customs person has to make sure your goods are legit (that is, not illegal) and that you’re a real person. They literally want to meet you in-person to verify your identity and typically at your office.
Then your Carnet list has to be absolutely perfect. You need a comprehensive, detailed manifest of every single item you’re moving. If customs opens a box and finds something that isn’t on the list (like a stupid little cheese plate or remote focus), they will make you pay the import duty.
Customs is so serious about this list that it’s best you don’t do it yourself. You’ll probably fuck it up. Instead, hire a company who’s good at this. Rely on the people at the prop, camera, electric,and wardrobe rental houses to put lists together. They have experience because their shit goes all over the world. They know what Carnet requires and how to do this right.
Get Yourself a Fixer
You can remedy the challenges of filming in a foreign country in a few ways: Giving yourself lots of time, spending a lot of money, and hiring the fixer.
The first two methods are pretty self-explanatory, so let’s talk about the fixer.
In some places of the world, you’re required by law to hire a fixer. I think you should hire one even if you don’t have to. There are professional services for this kind of thing.
A fixer isn’t some cushy government make-work job that goes to someone’s brother-in-law. A fixer is a local guy who knows the area, knows the people, and knows the government. In some cases, the fixer knows which laws you can break, and who you can bribe.
In 2007, I worked on a snowboarding documentary in China. Back then China was building more than 150 ski resorts in like three years so they could train to compete at the Winter Olympics.
We sent an executive and an assistant to meet the fixer a few weeks before production. He was a government employee (but they aren’t always). The fixer made sure our office was set up and that we were approved to shoot. He was a great resource that kept us on track and prevented us from fucking up in a foreign place.
I’ve also worked in Russia and they are even stricter than China (especially in Red Square). The Russian government will assign you a handler who tells you where you can shoot, how you can shoot it, and who you need to pay. (Sometimes you have to pay a building owner just because his property is in the background.)
Even if you don’t work in a totalitarian place, it’s still important to have a local guy on the ground who can work the system, get you what you need, and keep you out of trouble. Need a last-minute permit? Forget to arrange transportation for the cast? Suddenly need 400 pounds of packing peanuts? Call your fixer.
Is filming in a foreign country impossible? No, of course not. It just takes planning, money, and first-hand knowledge of the area.