Date Published: 12/11/2020
ARCHIVED - Netflix, HBO, Amazon Prime and Disney TV face 5 per cent docking of Spanish revenue to fund European cinema
ARCHIVED ARTICLE A new audiovisual communication law in Spain seeks to ensure revenue is invested back into the creation of Spanish language films and series
A new law being proposed in Spain will, if passed, oblige pay-per-view video entertainment suppliers to contribute 5 per cent of the turnover they generate in this country to the financing of European cinema projects, affecting companies such as Netflix, HBO, Amazon Prime and Disney TV.
The “Law of Audiovisual Communication”, the draft of which has been made public in order for suggestions and proposed amendments to be submitted between now and 3rd December, clarifies that the funding may be either for films or for series, and that when the 5 per cent is applied to any company generating revenue in Spain of at least 50 million euros per year then at least 70 per cent of the contribution must be to audiovisual projects in one of the official languages of this country. In the case of those whose income is under 50 million euros, the entire 5 per cent is to be dedicated to the purchase of rights to completed European audiovisual projects or to the Spanish Cinematographic Protection Fund.
Smaller companies with annual turnover of under 10 million euros are to be exempt from the planned funding scheme.
One of the aims of this legislation is to introduce for these companies fiscal obligations which are similar to those already imposed on traditional television channels in this country: Mediaset and Atresmedia, which between them offer four of the mainstream terrestrial TV channels in Spain, are obliged to contribute part of their revenue to the funding of the Spanish film industry and the publicly owned RTVE television and service, and similar rules apply to the telecommunications companies Vodafone, Orange and Movistar.
Another regulation which is specified in the new draft law is that platforms such as Netflix and HBO would be forced to devote at least 30 per cent of their programming to European productions, and that among these at least half would have to be in one of the official languages of Spain.
The proposal is that the scheme should be managed and overseen in collaboration with the National Commission on Markets and Competition (roughly equivalent to the UK’s Monopolies Commission and Office of Fair Trading), with the companies being obliged to register with this body and provide information regarding how many subscribers they have and how much their subscriptions fees amount to.
This would allow their revenue to be monitored more accurately than a simple analysis of the tax declarations submitted, where there are grounds to believe that “real” turnover is vastly understated due to subscriptions from Spain being paid to companies registered in other countries such as Ireland and the Netherlands. In 2018, for example, the turnover figures declared by HBO and Netflix in Spain were 3.7 million euros and 540,000 euros respectively, totals which certainly do not correspond to the numbers of subscribers in this country, while in the Netherlands (with only 37 per cent of the population of Spain) the income declared by Netflix alone was 5,500 million euros.