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Italy’s film and audiovisual sector has recently become one of the country’s most challenged industries, facing issues in both employment and production. The government’s cuts to cinema funds, combined with complications in tax credit regulations and declining cinema attendance among Italian audiences, are further worsening the situation within the country’s audiovisual industry.
Funding cuts
The government’s decision to reduce its support for the film industry has recently become a major topic of discussion within the sector due to the budget law’s planned cuts to the national cinema fund.
Following the State Accounting Office’s decision to block a plan to add 100 million euros ($116 million) to the 2026 Cinema Fund, Culture Minister Alessandro Giuli held a meeting on Nov. 11 with representatives of industry associations. The main focus of the meeting was the budget cuts to the Cinema and Audiovisual Fund. After the meeting, the associations recognized the government’s will to increase the fund’s resources but emphasized that their concerns have not yet been resolved.
Amid the current crisis, on Nov. 15, Pope Leo met at the Vatican with around 160 representatives of cinema, including directors and actors such as Spike Lee, Cate Blanchett, Monica Bellucci and Ferzan Özpetek. The pope emphasized that today there is a need for “witnesses of hope, beauty and truth,” and noted that the film industry has the power to provide exactly that.
Speaking about the crisis in cinema, he added: “Movie theaters are experiencing a worrying erosion that is stripping them away from cities and neighborhoods. Many say that the art of cinema and the cinematic experience are in danger. I urge institutions not to resign themselves, but to work together to reaffirm the social and cultural value of this activity.”
Tax credit issues
Another debated issue is the tax credit. It is one of the financial government incentives to support film and television productions. The system allows producers to receive a tax deduction or rebate equal to a certain percentage of the project’s costs. While it may seem beneficial in theory, it caused much criticism within the industry.
The tax credit system isn’t actually new in Italy; it’s been around since 2016, but the decree issued in July 2024 introduced several changes that caused some challenges and criticism.
One of the main points of criticism is that the new system, which was designed to support independent and small to medium-sized productions, has ended up benefiting large-scale productions instead. The reason behind this lies in the new system’s focus on box office performance.
The amount of tax credit a film receives is linked to its box office revenue, which is a mechanism that naturally favors large-scale productions. Major studios already produce big-budget films with well-known names that guarantee strong ticket sales, while independent filmmakers rarely have that advantage.
There are also several challenges in the implementation of this system. Small producers are required to meet strict conditions such as signing distribution contracts in advance, ensuring a minimum number of screenings, and keeping their films in theaters for a set period. While these requirements are manageable for large companies, they are not the case for independent productions.
Corrado Azzollini, president of Confartigianato Cinema e Audiovisivo, the film and audiovisual division of Confartigianato Imprese, a major Italian business confederation representing small and medium-sized enterprises, stated: “Today, Italy is not competitive. The tax credit system exists all over the world, yet only in our country do small companies face great difficulties accessing it, while large productions obtain it without any problems.”
Groups from the industry, including Anac, 100 Autori and Air3, are calling for action to push for a review of the tax credit. “For over a year, the cinema and audiovisual sector has been living in uncertainty about its future. Seventy percent of workers are now unemployed. Independent cinema, the source of new filmmakers who build and preserve the cultural future of our country, and inspire the rest of the world, is at risk of extinction,” they stated in March.
In June 2025, Giuli announced that new corrective decrees would be introduced, stating: “We are intervening decisively to ensure that every euro allocated to support Italian cinema is truly used to produce culture, jobs and value. Enough waste: taxpayers’ money must go only to those who really make cinema.” However, despite this, the situation in the sector has not significantly improved, and many problems remain unresolved.
Falling attendance
The crisis in the film industry isn’t limited to these problems. Italians also have low motivation to go to the cinema. According to 2024 data from the U.K. Cinema Association, Italy has lower ranks in Europe for cinema attendance, compared to countries such as France, the U.K. and Spain.
While France recorded 181.3 million cinema admissions, the U.K. had 126.5 million and Spain reached 73 million; Italy lags with just 69.7 million admissions.
Although the Italian film industry is currently undergoing a period of challenges, for a country whose identity has long been integrated with filmmaking, the present crisis is unlikely to overshadow the Italian creativity that has shaped global cinema for decades.
