Advanced Television

Spain: ‘Netflix tax’ set at 5%

November 9, 2020

From David Del Valle in Madrid

Netflix, Amazon Prime Video and HBO, among others, will pay a 5 per cent revenue tariff in Spain to finance European TV series and movies.

The Spanish Administration is amending its TV laws with a new Ley General de Comunicación Audiovisual that will oblige global streamers to finance European productions at the same level as RTVE and private TV broadcasters.

Out of the 5 per cent, 70 per cent will go to independent producers who must produce up to 40 per cent of their output in Spanish (Castillian) or other official languages in the country (Catalonian, Galician, Valencian or Euskera).

All streaming platforms will have to meet the obligation except for those with revenues below €10 million in the Spanish market. Those with revenues lower €50 million will be entitled to acquire “exploitation rights of already finished audiovisual TV content”. All these platforms will have to be registered and provide information about the number of subscribers and their fees in Spain, with data to be managed by the CNMC. This is key as most US streaming platforms only report a minimum percentage of their revenues in the country, and divert their revenues to other countries with tax shelters. For example, in its first fiscal year 2018 in Spain, Netflix only reported €540,000 sales, paying just €3,146 in taxes.

According to the consultancy firm Comparitech, cited by El País, Netflix had 3.4 million Spanish subscribers at the end of the first quarter this year, generating €106 million in revenues. Now with the new law, the tax calculation will be made over “real revenues, not on fiscal reports”.

With this measure, popularly known as ‘Netflix tax’, streaming platforms will operate under the same legal conditions and with the same obligations as Mediaset, Atresmedia, and telco operators – Movistar, Vodafone, Orange – which are legally bound to finance Spanish cinema and the public broadcaster RTVE.

The amendment is a transposition of the European directive approved in 2018 and already applied in Germany, Denmark and Sweden – the first countries to adopt it.

OTT platforms will now have until December 3rd to adhere to the new ruling.

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