Read this.
Here's what I'm gathering from what comments on the article. It's a huge financial fiasco, that Hollywood pulls on almost every movie, through Germany. Basically, investors turn a huge profit by investing in doomed ventures (Uwe Boll's movies). How does this work?
Say you're a rich dude, and your net income (profit) is 10 million dollars per year. According to German law, you are taxed on that 10 million, not the rest of your income. You may make 50 million, but if 40 million of that is losses, you are only taxed for 10 million. So, you put this extra 10 million into a movie like Alone in the Dark.
Now say you're the company producing this piece of crap. You now have 10 million dollars invested into your movie. If you're doing the movie 100% legitimately, this basically means that at the end of the process, you'll give the investors a certain percentage of their investment back, based on how much money the movie makes. But if you're Hollywood, you aren't doing this legitimately. What do you do? You set up a tax shelter in Germany, where German investors give you money, before your movie has even begun. The advantage of this is that the investors can put their money into something completely tax-deductable, meaning instead of taking 15% hits in income taxes, they will take 5%, which ends up being in the millions as far as how much is saved.
There are dozens of other spins to add to the ball here, such as filming in several locations throughout the world to utilize other tax flaws, selling distribution rights, and all that jazz. However, the end product is a huge profit for every party involved. Take Tomb Raider. Ever hear that the budget for that piece of crap was $90 million? Did you know that the actual money required to make the movie was somewhere between $7-9 million? This, my friends, is why Peter Jackson feels compelled to sue New Line Cinema, for this very process of 'cooking the books'. Brought to you by your friendly neighborhood team of lawyers.
I can't sleep.
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