Netflix, YouTube to Pay Tax on Turnover in France Under New Law

The European Commission has greenlit a long-gestating French draft measure to have foreign streaming services such as Netflix and video-sharing websites such as YouTube that distribute content in France but are not fiscally established there pay a 2% tax to France’s National Film Board.

Upon receiving the European Commission’s approval, the French government signed a decree Thursday to enforce the new measure. The 2% tax will be levied on revenues made in France from subscriptions, in the case of Netflix, and from advertising, in the case of YouTube.

The money will be used by the film board, known as the CNC, to help finance French original content, from movies to TV series, video games and digital programs, via subsidies. The CNC expects to receive 2 million euros ($2.4 million) from Netflix and 2.5 million euros ($3 million) from YouTube, according to a source at the organization.

Previously, the tax was applicable only to subscription-based VOD and pay-per-view services and video-sharing services that were fiscally established in France. Amazon, which has been established in France since 2015, has been paying the levy, unlike Amazon Prime Video, which launched at the beginning of the year in France.

Netflix could dispute the decree in court as it did in Germany, where a similar film-fund levy went into effect in November. If the measure is expanded to other European countries, Netflix could be forced to contribute millions of dollars to national film funds across the continent.

Frédérique Bredin, the CNC president, said the decree marked “a big victory for French creation. We are, along with Germany, the first to bring the global services into our ecosystems to finance creation.” Bredin said the European Commission’s decision was crucial to put all services, local and international ones, on an level playing field.

Netflix has been paying VAT in France due to a bill enacted in 2015 that obligates service providers to pay sales tax based on point of consumption and payment, rather than at the point of distribution.

Netflix has so far invested $2 billion in content (original programming, licensed content and co-productions) in Europe since its launch and ranks as one of the world’s biggest purveyors of French content. It has several French original series on its slate. Besides the second season of its political thriller “Marseille” (pictured), it has commissioned the science-fiction series “Osmosis” and is developing Damien Chazelle’s “Chez Eddy,” which will shoot in Paris with an international cast, including French talent.

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