Online streaming giants face rise in tax to fund Spanish productions

Spain is preparing legislation that would impose a 5.0 percent tax on streaming giants like Netflix with the funds used to boost Spanish cinematic production, the government said on Friday.

Online streaming giants face rise in tax to fund Spanish productions
Founder and CEO of Netflix Reed Hastings speaks during a keynote speech at the Mobile World Congress in Barcelona on February 27, 2017. LLUIS GENE / AFP

The draft law, which would tax online entertainment platforms on the basis of earnings generated in Spain, seeks to bring existing legislation “in line with the reality of the market where new audiovisual players have multiplied as a result of new technologies”, an economy ministry statement said.

The reform is part of the government's Digital Spain 2025 strategy, one of whose aims is to improve the country's appeal as one of the most attractive locations for shooting films and series.

The text “extends the obligation to fund European audiovisual production to those providers offering services in Spain even if they're not based there” in a nod to platforms like Netflix, HBO, Disney and Amazon Prime Video.

“Providers with a turnover of more than 50 million euros generated from services in Spain must allocate 5.0 percent of these revenues to finance European audiovisual works or as a contribution to the Cinematography Protection Fund,” it says.

Of that amount, 70 percent must be used to finance audiovisual works by independent producers, and a minimum of 40 percent must be used to fund independent films “in any of Spain's official languages”.

For those earning under 50 million euros, that 5.0 percent can be diverted into buying the rights to finished European productions, but at least 70 percent must go towards works by independent producers.

Those earning under 10 million euros in Spain will be exempt from the proposed tax.

Global giants such as Amazon, Google and Netflix often pay very little tax in nations where they are not physically present, presenting a major challenge for many countries.

Early last month, the Spanish government gave final approval to a 3.0 percent tax on revenues generated by digital giants such as Google, Apple, Facebook and Amazon which will come into effect within three months.

It will apply to all internet giants with annual global sales of over 750 million euros and 3.0 million euros in Spain.

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Beskæftigelsesfradraget: What is Denmark’s employment allowance?

Denmark's government may soon announce changes to its tax reform plans, which will give all wage earners a bigger employment allowance. What is this and how will it affect foreigners' earnings?

Beskæftigelsesfradraget: What is Denmark's employment allowance?

What is the employment allowance? 

The Beskæftigelsesfradraget (from beskæftigelse, meaning employment, and fradrag, meaning rebate) was brought in by the centre-right Liberal Party back in 2004, the idea being that it would incentivise people to get off welfare and into a job.

Everyone whose employer pays Denmark’s 8 percent AM-bidrag, or arbejdsmarkedsbidrag, automatically receives beskæftigelsesfradraget. Unlike with some of Denmark’s tax rebates, there is no need to apply. The Danish Tax Agency simply exempts the first portion of your earnings from income taxes. 

In 2022, beskæftigelsesfradraget was set at 10.65 percent of income with a maximum rebate of 44,800 kroner. 

How did the government agree to change the employment allowance in its coalition deal? 

In Responsibility for Denmark, the coalition agreement between the Social Democrats, the Liberals and the Moderate Party, the new government said it would set aside 5 billion kroner for tax reforms.

Of this, 4 billion kroner was earmarked for increasing the employment allowance, with a further 0.3 billion going towards increasing an additional employment allowance for single parents.

According to the public broadcaster DR, the expectation was that this would increase the standard employment  allowance to 12.75 percent up to a maximum rebate of 53,600 kroner. 

How might this be further increased, according to Børsen? 

According to a report in the Børsen newspaper, the government now plans to set aside a further 1.75 billion kroner for tax reforms, of which nearly half — about 800 million kroner — will go towards a further increase to the employment allowance. 

The Danish Chamber of Commerce earlier this month released an analysis in which it argued that by raising removing all limits on the rebate for single parents and raising the maximum rebate for everone else by 20,300 kroner, the government could increase the labour supply by 4,850 people, more than double the 1,500 envisaged in the government agreement. 

According to the Børsen, the government estimates that its new extended allowance will increase the labour supply by 5,150 people.