Tax hampers EU audiovisual mart

Value added tax is singled out as a problem

BRUSSELS — Development of a single European market for audiovisual products, comparable to the U.S., is being held back by a lack of tax reform, the European Audiovisual Observatory warns in a report published Tuesday.

“This is a situation that the European audiovisual sector will have to reckon with for the foreseeable future, given the general reluctance of (EU) states to accept further limitations to their fiscal sovereignty,” it said.

Value added tax is singled out as a problem, with EU governments allowed to keep widely differing VAT rates, but not extend advantages to newer areas of exploitation, such as DVDs or video-on-demand services.

“As any further change is subject to a unanimous decision of (EU) states, the capacity of VAT legislation to adapt to the new realities of the audiovisual sector is severely limited, with the obvious risk that this may lead to certain distortions among the various branches of the audiovisual industry.”

The lack of a concerted effort to eliminate double taxation, in particular of cross-border royalty payments, is also seen as “a clear disadvantage” for the European audiovisual sector.

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