Spain proposes a tax on streaming content platforms aimed to finance public television

Within the project of the new Audiovisual Law of Spain, it has been proposed that on demand audiovisual content companies, such as Netflix, HBO, Amazon Prime, Disney+ or YouTube, assign 1.5% of their annual revenue in order to finance the RTVE State Station (Spanish Radio-Television) as from 2022. Such proposal has been submitted to public hearing for the second time and it is expected to be treated by the Chamber of Deputies at the beginning of next year. This new issue has been included in the draft bill by the State Telecommunications Secretariat, which depends on the Ministry of Economy, equating large streamers with telecommunication operating companies and television stations, who are paying that same rate nowadays.

On the other hand, the 0.9% contribution made by telecommunication operating companies to the Spanish public television for a decade would be removed, under the condition to collaborate with the deployment of the incipient 5G networks in Hispanic territory. However, the telephone companies having their own paid audiovisual content platforms, such as Vodafone, Telefónica and Orange, shall keep the obligation to pay the new rate.

Such draft bill also allows RTVE to market some means of advertising, such as including announcements on the online retransmissions of their contents. The financing on the part of these multinational companies to the public television is performed within the framework of the so-called “Netflix rate”, clause of the new Audiovisual Law which imposes US streamers who “provide the on demand television audiovisual communication service”, to pay 5% of their revenue in order to finance local production.

The RTVE headquarters in Prado del Rey, in Madrid | RTVE / Archive

The State Telecommunications Secretariat has declared that the calculation of the amount that platforms shall pay to the State will be made based on their actual revenues, and not on their declared revenues. However, the impossibility to audit such profits makes such calculation difficult since this arises from a percentage. At the same time, most of these platforms declare a significantly lower number than the real one, diverting revenues to societies located in countries with more favorable tax legislations, such as the Netherlands. The Netflix case, on its first fiscal year in Spain, in 2019, shows how the “streaming giant” declared 540,000 euros of annual profits. In fact, Netflix has 4.5 million subscribers in Spain, meaning that, during 2019, each Spanish user has paid 0.01 euros per month, figure which evidences the great evasion made by the platform.