Chapter 70: Moths to a Flame

In the bright office, Helen sat at her desk, looking at the lawyer across from her.

Though emotionally inclined to trust young Michael Davenport, primarily since this business might involve millions of dollars, she couldn't afford to be careless.

The opinion of more professional and trustworthy individuals was crucial.

"Ms. Koch, we've done extensive research and practical investigation over the past two days." The middle-aged, bald man with glasses, whose intelligence seemed to have cost him his hair, said, "Legally, there are no issues. This is a policy introduced by the government to attract foreign capital, encourage investment, and stimulate the economy."

Helen nodded slightly; Michael seemed as reliable as she had imagined.

The bald lawyer continued, "Regarding practical operations, several companies in Germany are engaged in related businesses and have facilitated multiple successful cases. Hollywood's Paramount Pictures, 20th Century Fox, New Line Cinema, and Lionsgate have all benefited from this policy. Additionally, TMG is assisting New Line Cinema in handling the Tolkien epic 'The Lord of the Rings' trilogy, which is expected to be approved soon."

Helen asked, "Will there be any follow-up issues? Such as clawbacks?"

"No," the bald lawyer smiled, "This is a law. Similar operations have been going on for years. It is a completely legal tax avoidance method."

He added, "The government introduced this policy to encourage film investment."

With numerous successful cases to reference and being a government policy, the operation was not an issue. Helen then asked, "What about intermediaries?"

"This policy has given rise to some intermediary agents," the bald lawyer explained. "Lawyers and accountants with extensive networks and operational capabilities have entered this industry, assisting foreign film projects in obtaining this preferential policy and charging substantial commissions."

He smiled, "The intermediary hired by Mr. Davenport is one of my colleagues. They specialize in the entertainment copyright business and have handled two film projects in the past, both of which were successful. From my personal analysis, the success rate this time is still very high."

Helen nodded slowly, "So legal tax avoidance is feasible?"

The bald lawyer was particular, "Completely feasible, provided there is a film cooperation partner."

Helen thought for a moment and decided, "Assist Tony in registering a company as soon as possible, and get in touch with Michael and his intermediary lawyer team to prepare the relevant matters."

"Okay," the bald lawyer was ready, "I'll get right on it."

After the lawyer left, Helen sat quietly in her office, thinking for a while, and then picked up the phone.

"Heidi? Yes, it's me, Helen. Are you free this afternoon? Shall we have afternoon tea together? Great, I'll invite a few friends."

"Louise, it's Helen. I've made an appointment with Heidi for tea this afternoon. Would you like to join us? Great, we'll wait for you."

"Marina..."

Helen knew many wealthy people, but many of them were troubled by heavy taxes.

Legal tax avoidance is always a very concerning topic for wealthy people.

With the help of professionals, Michael and Tony worked for a while, and Tony's company, Koch Film Company, was soon registered.

Seashore Entertainment also signed a copyright transfer and lease agreement with Koch's film company, and the intermediary team led by Lawyer Mueller began the process of applying for tax refunds.

The German tax rebate policy attracted Hollywood's attention mainly because a tax refund can be received even before the film is shot, based on the estimated revenue of the project.

The rebate amount is one-tenth of the film's estimated revenue, and the estimated amount cannot be randomly reported.

Mueller's team had done this before and had a mature operation method, basically using a coefficient of about 1.2 to 1.3 times the budget cost.

There are existing examples. Tom Cruise's "Mission: Impossible" also went through Germany, with a budget of $80 million and a German company estimating $104 million in revenue, successfully obtaining a $10.4 million rebate.

The estimated revenue amount cannot be reported arbitrarily, as failing the review would be a disaster.

The intermediary team bundled "Final Destination" and "The King's Man" into one project package, which is estimated to have generated $50 million in total revenue.

Additionally, Mueller's team actively lobbied and conducted public relations.

In many ways, this intermediary team was akin to the professional brokers from Michael's previous life.

Connections and channels, even family backgrounds, can sometimes directly translate into financial benefits.

This was Michael's first time in Germany. Although he had a lot of theoretical knowledge, he had never operated in practice. Initially, he wanted to cooperate with German film companies, but later chose the backup plan, relying on German intermediaries for actual operations.

In this unfamiliar country, he mostly followed the intermediaries, watching and learning.

Of course, Tony Koch played an essential role.

Tony temporarily took leave from his company in Munich to work with Michael, focusing on the tax refund and other matters for the two films.

"If this works out, the commission alone..."

After a busy morning, Tony said to Michael while having lunch, "will equal several years of my salary."

Michael looked up at him and asked, "After completing these two projects, why not quit and do this full-time? I have many film projects lined up."

Tony nodded repeatedly, "I've been thinking the same. Michael, you've opened a new world for me!"

Michael extended his right hand, "To our future cooperation."

Tony shook his hand firmly, "To our cooperation." He withdrew his hand and asked, "How long do you think this tax refund policy will last?"

Michael shrugged, "I don't know."

Anyway, it seemed to still exist in his previous life's final year.

The German government's original intention in formulating this tax refund policy was good, but now Hollywood and some European film companies, in cooperation with German film companies, are somewhat exploiting this policy.

Many countries offer tax rebates for films but impose strict restrictions. For example, New Zealand, Canada, and Australia require that films must complete more than 80% of their shooting in the country to enjoy tax rebates.

Even the relatively lenient UK requires that part of the film be shot in the UK and that the crew must include British actors, etc.

In comparison, Germany has one of the most lenient tax rebate conditions. It does not require shooting in Germany, nor does it mandate the use of German actors or crew members.

In this regard, Germany can be seen as a haven for Hollywood films.

Of course, not all submitted projects pass the review.

This game can only be played by commercial films with relatively high investment. Small-budget art films cannot drive the market and economy, and the high lawyer and intermediary fees are unaffordable for small companies and productions.

"How is Aunt Helen's progress?" Michael asked at this moment.

Tony shrugged, "Very smooth. Mom has convinced several friends and business partners that legal tax avoidance is also what they want. The $40 million will soon be in place."

Michael lowered his voice deliberately, asking, "How much commission are you taking?"

Tony spread his hand, "It's the first time, and they're mom's friends, so I can't take too much." He shook his head and said, "You really don't understand an industry until you enter it. A tax refund policy can be manipulated in so many ways by film companies."

Michael smiled, "This is just a loophole that can be exploited."

"What should I do with this company in the future?" Tony asked earnestly, "Can you give me some suggestions?"

Michael thought for a moment. Tony's business did not conflict with his, and doing well would be helpful in the future. He said, "Use your Koch Film Company to set up a film fund and legally raise funds from the public. In our future cooperation, you can charge a higher commission... and if your fund actually invests in my films, you can also share in the film's profits."

He also added kindly, "When you have time, go to Los Angeles and see how Hollywood operates."

Hollywood's allure for foreign investors is eternal. Even if one group retreats, another will step forward.

Tony rubbed his chin, "That sounds great."

Michael smiled. If this worked out, there would be a stable funding source for future film investments.

There's a consensus in Hollywood that the financing structure is set up so that the financiers bear the most significant risks, while Hollywood gets "subsidies" and distributors make guaranteed profits. Therefore, foreign financiers investing in Hollywood are genuine suckers.

Tony asked again, "Are there many people interested in film investments?"

Michael said directly, "Hollywood is like a lamp that always attracts moths. It's not hard to attract moths."