Who: French National Assembly
When: 21 October 2016
Law stated as at: 21 October 2016
On 21 October 2016, the French parliament ruled against a Bill which was previously passed on 12 October 2016 by the finance committee of the French legislature’s lower house. The Bill, nicknamed the “YouTube Tax”, required platforms distributing free and premium video content to pay 2% (and up to 10% for pornographic/violent content) of their advertising revenue within France to the country’s National Film Board, in order to help finance local content. The tax was also aimed at ad-free sites, which would have been accountable based on their subscription revenues. However, as an exception, “amateurs” posting videos were excluded from the remit of the Bill.
The proposal is rooted in France’s Conseil Supérieur de l’Audiovisuel’s (the “CSA”, an independent broadcasting authority), earlier declaration that video-sharing websites should be subject to a tax that helps finance the production of French films and TV shows. Such “culture tax”, totalling approximately over 1.3 billion Euros annually, is already paid by movie theaters, broadcasters, and internet service providers in France.
The proposal for the Bill was further pushed before the French Assembly by a trio of French Socialist deputies (Karine Berger, Bruno Le Roux, and Pierre-Alain Muet). These deputies argued that the Bill would restore fairness in the system by taxing some of the global digital giants which have been distributing their content in France, but have not been subjected to the same investment quotas for local content that French companies have.
However, the deputies who have voted against the Bill argued that such principle would have to be extended to other European Member States because these global giants often have headquarters abroad (and especially in Ireland, for instance) and can avoid paying taxes on all of their revenues in France.
In a statement released on 21 October 2016, the French “Société civile des Auteurs Réalisateurs et Producteurs” (the “ARP”, the French association of authors, directors, and producers) said that “The ARP also argued that getting the law voted in France could be a good starting point to encourage other countries to follow the same footsteps.”
Why this matters:
Despite welcoming the French Parliament’s decision to rule against the so-called YouTube Tax, this may not be the end of all worries for video-sharing websites in France. Indeed, according to the President of the French Society of Authors, Composers, and Directors (SACD), the bill will be re-examined by the Senate as part of the budget law during the last quarter of this year. If passed however, the measure would then have to get approval from the European Commission.
Osborne Clarke will be monitoring closely the evolution of the law.