Wednesday, 25 November 2020

Spain to squeeze OTT streaming platforms to support European video content

by Harry Baldock, Total Telecom
Monday 09 November 20

A new tax has been drafted that would dedicate 5% of the over-the-top (OTT) services’ Spanish revenues towards developing local audiovisual content

The Spanish government has drafted a new law that would require OTT streaming platforms, including Netflix, Amazon Prime, HBO, and Disney+, to reinvest 5% of their Spanish revenues into the European audiovisual content industry.    As part of the new law drafted by the Ministry of Economic Affairs and Digital Transformation…

The Spanish government has drafted a new law that would require OTT streaming platforms, including Netflix, Amazon Prime, HBO, and Disney+, to reinvest 5% of their Spanish revenues into the European audiovisual content industry. 

 

As part of the new law drafted by the Ministry of Economic Affairs and Digital Transformation, any streaming platform with revenues over €50 million generated from Spain will be subject to the 5% tax, which will go directly towards funding European audiovisual works or as a contribution to the Cinematography Protection Fund.

 

The tax itself would be further subdivided, with 70% being used to fund independent content producers and at least 40% supporting independent films in Spain’s official languages. 

 

Platforms earning less than €50 million are not entirely exempt from the law and instead that 5% tax will be required to fund the rights to finished European productions, with 70% again going towards independent producers. 

 

Those companies with revenues under €10 million will be entirely exempt. 

 

This reform comes as part of Spain’s ‘Digital Spain 2025’ strategy, which hopes to boost the domestic film industry. The film industry itself has struggled enormously in the wake of the coronavirus pandemic, meanwhile streaming services like Netflix and Amazon Prime grow ever more powerful.

 

But the origin of this tax is not only found in a will to protect Spain’s multibillion dollar film industry. In fact, this is part of an ongoing narrative throughout Europe, where so-called OTT services make enormous profits from countries where they pay very little in tax. In fact, last month the Spanish government announced a 3% tax on the digital revenues of large internet firms like Google, a move which they believe will raise around €1.2 billion a year.

 

With Google also facing an antitrust case brought by the US Department of Justice, it seems as though lawmakers are gradually turning the screws on the digital giants. 

 

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