Film production companies have long looked for creative ways to finance their projects. Most recently, international tax policies have emerged as a significant consideration in U.S. film financing. Nowhere has this trend been more clear than in Germany. In fact, Merrill Lynch estimates that German film funds cofinanced 15 to 20 percent of all major Hollywood movies in 2001. Studios, including Paramount, Universal, Fox and New Line, have used German funds to help produce such blockbuster movies as Mission: Impossible 2, The Lord of the Rings trilogy and Shallow Hal. According to Variety, this trend continued in 2002, with Germans investing more than $2.3 billion in U.S. films. An analysis of the tax benefits, financing structures, German requirements and U.S. issues associated with this film financing technique demonstrates why international tax factors have become so important to the U.S. film industry.