Spanish Telecommunications Tax May Benefit Private TV Channels

by Ulrika Lomas, Tax-News.com, Brussels

13 May 2009

The Spanish government has announced that lost revenues stemming from its plans to phase out advertising on public television station RTVE will be offset with an increase in taxation on private television stations and telecommunications operators.

The new system will levy a 3% tax on private broadcasters’ gross revenue while the telecommunications industry will be subject to a 0.9% tax on its gross revenue.

Although the new tax is expected to cost the two industries EUR400m, private TV channels are, according to the government, set to benefit from the new tax. Until now public television channel RTVE has been criticised for disrupting market prices - RTVE was able to undercut private broadcasters when negotiating advertising contracts with companies. By eliminating it as competition under the new arrangement private channels will be able to compete on a level playing field for advertising contracts.

Although the tax will be in part welcomed by private television channels, the telecommunications industry has denounced the decision arguing that the tax should instead be solely financed by the audio-visual industry. The industry instead proposed that the government levy an annual one-off tax or license fee per viewer, as is already the case in the UK. The government however promptly ruled out the suggestion and maintained that it will continue with its proposals.

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