A Netflix tax in Spain will fund country’s film industry

Since Netflix arrived in Europe, it has outperformed traditional competitors. Then came Amazon Prime, HBO, Disney+ and other streaming platforms, leaving traditional television operators on the sidelines. TV broadcasters have been denouncing for some time that it is unfair competition since new digital suppliers are not subject to the same rules, or better taxes, that the former are obliged to respect.

Television stations such as Mediaset and Atresmedia have to pay 5% of their income to finance European cinema and 3% of gross earnings to finance RTVE  Corporación de Radio y Televisión Española). Platforms providing online audiovisual services, on the other hand, do not pay anything. Furthermore, they only declare a little percentage of their income in the country, shifting their profit to countries with favorable corporate taxes, such as Holland. 

The Ministry of Economy has therefore decided to even things out between traditional operators and operators using new technologies, by implementing the directive 2018/1808 of the European Parliament of 14 November 2018 which amends the previous legislation (2010/13/EU) on the coordination of certain provisions laid down by law, regulation or administrative action in Member States concerning the provision of audiovisual media services. The aim is to “adapt and modernize the existing European regulatory framework on audiovisual services, seeking to establish an audiovisual regulation in line with the digital era”. 

According to what is written in the draft of the new General Law of Audiovisual Communication, the Spanish government will introduce a 5% tax on streaming platforms to be used for the financing of European audiovisual works and the contribution to the Film Protection Fund. 70% of the amount will be allocated to audiovisual works by independent producers and at least 40% must be used for independent films made in any of Spain’s official languages.

The law will affect companies with a turnover of more than 50 million euros a year and will involve all the providers offering services in Spain even if they are not based in the country. Providers with a turnover of under 50 million can divert the tax into the acquisition of rights to finished European productions. On the other hand, companies with a turnover under 10 million will be exempt from this obligation and therefore will not have to pay any taxes.