seanpenn 100Milan-based Intesa Sanpaolo has made a groundbreaking investment in Sean Penn’s next project This Must Be the Place. It has become the first Italian company to use the country’s new film tax credit system. The bank is investing €2.5 million ($3.2 million) in Paolo Sorrentino’s $28 million comedy. If successful, Intesa Sanpaolo could spark a whole new investment wave in Italian production.

Forty per cent of the bank’s investment is sheltered through Italy’s new 40% film production tax credit.

Stefano Massenzi of co-producer Lucky Red tells me, “Banks usually lend money, they don’t invest. But in this case Intesa Sanpaolo invested in our project.”

This Must Be the Place begins shooting on August 16 on location in Ireland. Then it moves to the US.

Frances McDormand co-stars with Penn. David Byrne, ex-Talking Heads, is writing the score.

The Italian tax credit – which confusingly behaves like a rebate in that taxpayers deduct it from tax they owe – became law in 2007. But the culture department and Finance Ministry only spelt out how the new tax credit should work in April.

Italian_flagThere are different categories of tax credit. Producers can only knock 10-15% off their monthly tax bills (Italian companies submit their F24 paperwork every four weeks). Distributors and exhibitors can claw back 20%. Investors unconnected to the business qualify for a higher 40% tax rebate. This means they can deduct 40¢ out of every euro invested, capped at €1 million rebate each year.

Intesa Sanpaolo is credited as associate producer alongside Italian lead producers Medusa, Indigo Film and Lucky Red. Element Pictures of Ireland is also on board as is French co-producer ARP. Pathe, also an associate producer, is handling international sales — although the producers are retaining the US sale for themselves. Eurimages, the European co-production fund, is supporting the project, as is the Irish Film Board.

This Must Be the Place has been described as a comedy thriller. Sean Penn plays a jaded ex-rock star who, after his father’s death, goes on an obsessive quest to find the former Nazi concentration camp officer who persecuted his father in Auschwitz. Sounds like a bundle of laughs.

Penn told Sorrentino that he wanted to be involved in whatever his next project was when he saw Il Divo as part of the Cannes jury in 2008.

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