The much-anticipated decree implementing the tax on advertising revenue from sites providing online videos, dubbed the “YouTube Tax”, the “Netflix Measure” or even the “Dailymotion Tax” by skeptics, was published on September 20 in the official journal and will be implemented from January 1, 2018.
YouTube: Financial regulation for audiovisual content platforms
Stemming from the 2016 supplementary budget law and announced by the current Minister of Culture and Communication, Françoise Nyssen, the tax on the distribution of audiovisual content in physical and online video formats targets companies that store and make available, including free of charge, audiovisual content intended for the French public: YouTube, Netflix, Amazon Video, etc.
“Companies selling and renting videograms in physical or digital format established outside of France, and companies that make audiovisual content available to the public in France free of charge, whether they are established in France or abroad.”
Décret n° 2017-1364 du 20 septembre 2017
Calculated on the pre-tax amount of payments made by advertisers and sponsors to the relevant tax authorities or advertising and sponsorship agencies, the tax includes a flat-rate allowance of 4%, increased to 66% for services providing or enabling access to audiovisual content created by private users for sharing and exchange within communities of interest.
Furthermore, it excludes from the tax base amounts paid for advertising on catch-up TV services, which are subject to a separate tax.
Conversely, the tax rate is increased by 2% to 10% for advertising or sponsorship revenue derived from “the broadcasting of pornographic or violent content and cinematographic or audiovisual works.”
The target here is the broadcasters Pornhub and YouPorn, which benefit from a particularly impressive amount of internet traffic: 91,980,225,000 audiovisual content views in 2016.
YouTube tax: legitimate concerns about its actual impact
Intended for publishers of on-demand audiovisual media services and community platforms that store or provide access to audiovisual content, including Dailymotion, iTunes, Twitch, etc., the decree excludes, by contrast, information services whose audiovisual content is considered secondary: press, film industry advertisers, etc.
Many online services such as Facebook, Twitter, and Snapchat thus appear, at first glance, to be excluded from the scope of the decree, even though their audiovisual content represents an ever-increasing share of their activity and appeal.
“Services whose audiovisual content is secondary, services whose primary purpose is to provide information, and services whose primary purpose is to provide information relating to cinematographic and audiovisual works and their distribution to the public and to promote them, particularly through excerpts or trailers, are exempt.”
Article 1609 sexdecies B Code Général des Impots
Similarly, while presumed to apply to both French and foreign-based services, it appears difficult in practice to gather the necessary financial data—revenue attributable to French consumers—for foreign publishers and platforms to calculate this tax.
Expected to generate €17 million for the video/VoD tax and €2 million for the YouTube tax, these sums are intended to contribute to the financing of content creation in France, including paid audiovisual services and those that rely on advertising.
However, the use of funds allocated to the National Center for Cinema and the Moving Image (CNC) is criticized by some associations, which denounce the CNC’s lack of support for creators of audiovisual content exclusively online, particularly for the distribution of videos on the internet.
These measures will soon be complemented by those stemming from the European directive on audiovisual media services (AVMS), intended to more rigorously regulate video sharing platforms, particularly through their compliance with the regulations of the countries whose audience is targeted.
