EU May Cut VAT On Movies And Videos

by Ulrika Lomas, Tax-News.com, Brussels

28 September 2001

The EU Commission yesterday adopted a 'Communication on the future of cinema and the audiovisual industry in Europe' which calls for a reduced or zero rate of VAT on cultural products and services. The Commission said it might include such proposals in a review of the sixth VAT Directive, following a consultation on EU policy for film, television and other audiovisual industries.

'The audiovisual sector in Europe,' says the Commission, 'which is a strategic industry because of its cultural importance and its potential for the creation of wealth and jobs, continues to suffer from numerous handicaps that hinder the circulation of films and other audiovisual works'

The biggest handicap it suffers from, according to a recent report which showed that the oceans of money thrown at UK movie-making in the last five years have been almost totally wasted, is interference and subsidy from EU and national governments, and the last thing it needs is more force-feeding.

Apart from the economic nonsense of subverting the market, Governments use subsidy schemes to bend cultural activity in directions that please them, as when the French for instance ban the use of Americanisms in subsidised movies. The introduction of privileged rates of VAT for movies or videos is sure to be accompanied by a raft of cultural imperatives. The Communication says about its current subsidy schemes:

'Member States must ensure the cultural content of the works supported, on the basis of verifiable national criteria. In accordance with the principle of subsidiarity, the Commission does not express a view, at any stage, about what is considered to be cultural.'

Read the whole Communication (if you can be bothered) in Tax-News Resources.

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