Boll is able to acquire funding thanks to German tax laws that reward investments in film. The law allows investors in German-owned films to write off 100% of their investment as a tax deduction; it also allows them to invest borrowed money and write off any fees associated with the loan. The investor is then only required to pay taxes on the profits made by the movie; if the movie loses money, the investor gets a tax writeoff.
While Boll has received a lot of negative publicity regarding this funding method,[6] he was actually one of the few directors to use the tax shelter as intended. His films were financed, produced, and directed by a German company, which was the initial intention behind the tax shelter: to provide incentive for investment in German entertainment properties. Regardless of the law's intention, most of these German film funds ended up funneling money to American studios to finance American blockbusters. The law merely required that the movie's copyright be owned by a German company; thus studios would "sell" a movie's rights to a German company, then immediately lease the movie back for a small fee, while the German owners would agree to very limited control. Essentially, the German company would own the movie on paper, but have no say over its production. Because of this, in January 2006, as had been expected for several months, the German legislature changed the country's tax laws to eliminate the tax shelter. It is not known if this will have any effect on Boll's funding as the new laws only seek to punish investors who are abusing the law for tax purposes; Boll's activities appear to be well within the legitimate usage of the tax shelter.
