A European Advertising Lawyers’ Association “mini survey” organised by Czech EALA member Filip Winter of Prague’s Winter & Spol reveals which European countries are levying a tax on advertising. Does this suggest that harmonisation measures are needed?
Title: Filip Winter, Prague Member of the European Advertising Lawyers' Association, and other EALA members
When: December 2002
European Advertising Lawyers' Association ("EALA") member Filip Winter of leading Czech marketing law firm Winter & Spol of Prague conducted a "mini survey" amongst the EALA members on a question of tax. The question was simple. Was there any special tax levied on advertising in the EALA member's country?
The answer revealed a surprising level of harmony across Europe, without there ever having been any relevant levelling measure introduced by Brussels. The answer was that there was no tax of any kind on any form of advertising expenditure in Spain, Ireland, Germany, Denmark, Netherlands, Hungary, Czech Republic, Switzerland and Finland.
On the other side of the equation, Sweden comes out top of the tax heap with 4% on all print media advertising spend, and a stonking 11% on media spend on advertising in all other media intended for publication in Sweden. Austria comes a close second with a 5% tax on all advertising expenditure. Italy sported a municipal tax on outdoor advertising. Belgium fielded a local tax on door to door leaflets. levied a . France won the prize for the most complex ad tax system, with 3 different types. First there was a 1% tax on advertising applicable to companies whose turnover for the previous year was over €763,000. Second there was a special tax applicable to TV advertising. This is paid by advertising sales companies when the ads are received in France. Finally there is a "para-fiscal" tax which applies to revenues from TV and radio advertising. The proceeds from this tax go into a special fund which is dedicated to enriching French radio broadcasting.
So what about the UK? Well, we don't operate any ad tax system as such, but there is the "ASBOF levy". "ASBOF" or the "Advertising Standards Board of Finance" is one of the 3 bodies that operate the UK's self regulatory system for non broadcast advertising. The other two are the Committee of Advertising Practice (whose primary function is to draw up the self regulatory "CAP" code) and the Advertising Standards Authority, which adjudicates on complaints that the Code has been breached.
ASBOF's job is to finance the whole system. It does this by way of a 0.1% levy on the gross cost of UK outdoor cinema and press display advertising, (excepting classified lineage, semi-display and any displays, screenings or publications outside the UK) and 0.2% of the postage cost of direct mailings in the UK.
Why this matters:
Although historically tax has been an area where EU harmonisers have feared to tread, there is a new Franco-German impetus behind harmonised EU taxes generally, and the suspicion has to be that it will only be a matter of time before the Commission lights upon advertising tax harmonisation as a new issue to explore. Though there is already a considerable measure of harmony in that the vast majority of EU states have no such tax, there are obvious glaring exceptions, with Sweden, Austria and France in the forefront.