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Institutions / Legislation - Switzerland

Industry Report: European Policy

Switzerland’s Council of States approves the “Netflix tax”

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This week, Swiss councillors approved the obligation for online streamers to invest at least 4% of their turnover in the Confederation’s film industry

Switzerland’s Council of States approves the “Netflix tax”

After the G7’s historic deal on implementing a minimum 15% global corporate tax on tech giants and tax havens was sealed on 5 June, this week, Swiss senators have approved the implementation of the so-called “Netflix tax”. The news was reported by the Swiss French-language daily Le Temps.

The provision, backed by the Council of States, requires online streamers operating in Switzerland to invest at least 4% of their turnover (as against the 1% proposed by the National Council) in the local audiovisual industry. On Monday 7 June, the Assembly’s upper house stood firm on the idea that online streamers should be subject to a fiscal constraint comparable to that already hitting the Swiss Broadcasting Corporation and other regional TV channels. Similar provisions are being discussed and approved throughout Europe. For example, Spain is currently planning a 5% tax on streamers’ local turnover, and last year, Poland adopted a 1.5% tax to be paid to the national film institute and aimed at financing the production of domestic content.

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However, the National Council fears that the additional costs generated by the “Netflix tax” will be borne by the users, who might see increased subscription fees creeping in. The mechanism basically consists of an obligation to invest in the country’s audiovisual sector, and if they fail to accomplish that, streamers will be forced to pay a so-called “replacement” tax. During the negotiations, the SVP/UDC party pleaded for a 2% compromise, whilst other political forces such as FDP kept up the pressure to maintain the 4% quota.

The Netflix tax is part of a wider new film law, included in the Federal Office of Culture’s agenda for the period 2021-2024. The new film law also contains the much-discussed 30% compulsory quota for European audiovisual content in the offering provided by online streamers, already approved by both chambers.

The National Council will continue the debate. Watch this space for more updates.

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