Culture is future » Financing and economic models


Contribution: "The European creative economy did not invent a tax policy yet " by Clara-Doïna Schmelck

In the European Union, the cultural and creative sector is characterized by a lack of coherence between the states regarding tax policies. Is that an obstacle or an advantage for the creative economy’s development?

In the middle of an ongoing debate on how about a hundred festivals in France were cancelled due to a lack of financial means, the first findings of the study by the consultancy firm EY to be released in the fall 2015 and focusing on 16 countries, 13 of which being European, show a disparity between the European governments’ approaches regarding cultural taxation. The absence of coherence and of common vision makes the measuring the impact of fiscal instruments such as the modulation of VAT, the derogatory taxations and indirect subsidies via tax credits, on the cultural and creative industries structuring difficult.

Absence of coherence

In the member countries of the Union, the cultural sector includes sectors as various as art market, historical monuments restoration and requalification, festivals, movie production, animation of even publishing. The problem is that every word does not have the same meaning from one country to another.

A ‘book’ on the one side of the Pyrenees is a ‘service’ on the other side. “There is no common denominator” Alain Kouck, President of Editis Holding, regrets, and thus there is no coherence in fiscal attractiveness policies: how can we harmonize the rates on e-books when no European state agrees with another on the definition of an e-book? Awaiting a definition, the reduced VAT rates applied vary from 1 to 12 among the countries: from 0% in United Kingdom to 12% in Latvia.

Moreover, governments do not give the same importance to the various cultural fields. The heritage monument sector benefits from tax incentives in only 4 European countries out of 13, according to the study released by EY. In a country filled with ancient monuments such as Italy, restoration, maintenance and renovation of works confers a right to 65% tax credits.

Finally, the tax base is not the same in the countries of the Union, given that tax credits do not work in the same way. The only point on which all agree is VAT, which is the only community tax in the European Union. However, the rate is not the same in every European country. Netflix negotiated its VAT rate in Luxemburg, until the 1st January 2015’s directive, which broke this privilege.

Competition lever

The problem is that cultural and creative industries are shaken by a phenomenon of fiscal competition. Investors, starting with the GAFA, settle where taxation is the lowest, and Indian producers choose to film sacred cows in Switzerland to avoid to pay taxes on the other side of the Alps.

An incentivizing tax policy is not limited to a minimal tax rate: it is also a whole range of subsidies and taxes. If France secured third place within world cinematographic industries, after the American and Indian cinema, it is partly thanks to is triple policy of tax allowance, taxation of cinema tickets and subsidies granted to cultural collectives. How difficult it must be for new European states from Eastern Europe to compete with French cinema.

We can also mention indirect tax policy in a regional scale, when the Alsace region attracts cinema producers with a more interesting subsidy than that granted by Aquitaine region. Alsace justifies itself by showing the efforts made in the region for early education in cinematographic professions.

What if Europeans, instead of standardizing their tax policies, were looking for specialization by cultural field, could this provide an agreement? Wondered the participants during the debate organized on July 7th by the think tank of the Forum d’Avignon. We can imagine for instance a consistent system for a specific field or a given activity to help mobility.

Taxing OTTs

The European Union starts thinking about tax policies for creative and cultural industries while it is confronted with the digital stakes, starting with those of crowdfunding. Already three years ago, in 2012, the Centre des musées nationaux, under the Ministry of culture and communication, appealed to crowdfunders to financially support the restoration of four monuments of French heritage: the Panthéon, the Mont-Saint-Michel, the statues Hippomène and Atalante in the Domaine national de Saint-Cloud and the “Dame Carcas”, symbol of Carcassonne’s city. Crowdfunding is a kind of patronage without tax credit.

More preoccupying is the difficulty the European States attempts, starting with France, to tax the GAFA. “Invited by the Association of media journalists, Wednesday 8th of July, Fleur Pellerin qualified as a “nightmare” the project to make OTT platforms contribute to creation”, because of bilateral and European conventions; “nonetheless expert assessments are being realized by the Arcep (Regulation authority on electronic communications and posts) to see if a metric volume can be taxable, allowing to apprehend the big consumers of videos to take advantage of huge advertising revenues” explains the weekly Strategies. The challenge is crucial: it is impossible to preserve the French cultural exception without making net giants such as YouTube, Google or Apple contribute to audiovisual creation. 

About Clara-Doïna Schmelck

She is journalist, head of the « Media » section from Intégrales Mag, which is the pure player for Intégrales Productions, a presse agency specialised in television coverages around Europe, Middle East and Africa. She often publishes leading articles in RFI Atelier des médias, MétaMédia, France TV Info but also CB News, Libération and Le Plus de l’Obs. She is graduated from ENS, and she holds a philosophy master, leading her to become attached to information and new communication forms stakes.

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On Twitter : @ClaraSchmelck