Maurício Fittipaldi, partner at São Paulo law firm CQS/FV, highlights two initiatives currently underway that could attract ‘billions of dollars’ of investment to the Brazilian audiovisual market.

This year will be remembered as a historic one for Brazilian cinema with the Golden Globe and Oscar for Best Foreign Language Film for I’m Still Here, the Silver Bear in Berlin for The Blue Trail and the two awards won at Cannes by The Secret Agent.

However, according to Maurício Fittipaldi, a partner at Brazilian law firm CQS/FV, this momentum will come to nothing if the country does not take the necessary measures to attract international capital.

“I have already experienced many moments like this that unfortunately we failed to take advantage of. This is a very positive moment, of course, and these projects should serve to boost the Brazilian market’s profile. But that will not happen until the country definitively opens up to international capital,” he says.

With over 20 years of experience in the sector, Fittipaldi is one of the most renowned lawyers in the audiovisual segment in Brazil. CQS/FV, with 30 years of experience, is one of the most active law firms in the market in media, entertainment and technology, with clients ranging from production companies to streaming platforms, advertising agencies and advertisers.

Series such as City of God (HBO Max), DNA do Crime (Netflix), Maria e o Cangaço (Disney+), Cangaço Novo (Amazon) and the Turma da Mônica projects (HBO Max and Globoplay) are just a handful of the titles that have used CQS/FV’s services in recent years.

“We are involved in 10 to 15 projects and have participated in more than 50 in the last five years alone,” says Fittipaldi, who explains that the firm offers comprehensive legal services for series and films in the areas of tax, corporate, labour, regulatory, contractual and intellectual property law.

Cangaço Novo is among the projects to have used CQS/FV’s services in recent years

It is from this position that Fittipaldi affirms that the Brazilian market has everything it needs to lead a major push that will turn it into “the new Korea”. But to do so, it must take certain measures. “Brazil can grow like South Korea and Spain did, but to do so it must open up to international capital and take advantage of it to develop the industry,” he explains.

In this regard, the lawyer regrets the absence of more cash rebate and tax incentive mechanisms in Brazil. He also notes that those currently existing are neither widely used nor designed to attract international capital.

“All over the world, cash rebate or tax credit mechanisms are real mechanisms for attracting international investment. But in Brazil, the existing mechanisms are designed much more to promote audiovisual activity than to attract foreign investment,” he stresses.

Indeed, according to a recent study by Olsberg SPI, if Brazil were to implement a federal cash rebate capped at US$100m per year, it could generate up to US$1.03bn in direct audiovisual spending by 2030, with more than 15,000 associated jobs.

This potential does not depend on additional investments in infrastructure, clarifies Fittipaldi, who emphasises that Brazil already has the installed capacity to receive international productions. “The study shows that the country could generate billions without the need for large new investments, just by correcting the rules,” he says.

HBO Max hit series City of God

Brazil is also losing ground to countries such as Colombia, Uruguay and Spain, which already have competitive cash rebate mechanisms in place.

“It’s a highly competitive global market, and if we don’t have rules that are up to par, productions will go elsewhere,” warns Fittipaldi. He also regrets that, in general, policies to promote the audiovisual industry in Brazil are not designed from the perspective of attracting foreign investment, something that is evident in cases such as those of local production companies Floresta and Endemol Shine Brasil.

“Both operate from Brazil, generate local employment and seek to attract productions from their international parent companies, but they do not qualify for promotion programs because they have foreign capital. They are in legal limbo,” says the lawyer referring to their respective parent companies, Sony Pictures Television and Banijay.

In this sense, Fittipaldi is one of the main “evangelists” in Brazil on the need for these changes and, he believes, the message is reaching the political class. “It’s not about choosing between national funds or incentives for foreign investment but about combining them. More international investment means more infrastructure, which in turn increases the capacity and value of local production. One thing feeds the other,” he argues.

The lawyer also highlights another initiative currently underway that could mean even more million-dollar investments: the Fundos de Financiamento da Indústria Cinematográfica Nacional, or National Film Industry Financing Funds (aka Funcines).

“Funcines are very interesting mechanisms because they give companies incentives to invest in the audiovisual industry with tax benefits of up to 100%,” he says. “And this has enormous potential to attract capital to the industry and develop it.”

The mechanism already exists in Brazil and works similarly to other investment funds regulated by the Securities Commission, such as real estate funds. But in the case of audiovisual media, its regulations are so bureaucratic and full of obstacles that it is not attractive to use, he says.

But that is about to change, warns Fittipaldi. “There is an initiative by the National Film Agency [Ancine] to simplify the regulation of these funds. This could bring billions of reais to the industry,” he says.

He gives an example: “A bank, for example, can invest in an audiovisual infrastructure investment fund, and this fund can invest in projects, equipment purchases and studios using only the money it would otherwise pay in income tax. This could change the market,” he adds.

“From my point of view, the two major obstacles that can be overcome are cash rebates and Funcines,” he concludes.