Switzerland to Hold 4% Tax Referendum on Video Streaming ⋆

Switzerland to Hold 4% Tax Referendum on Video Streaming

A nationwide referendum is to be held in Switzerland on May 15 on a proposed law that would force streamers like Netflix and Amazon Prime Video to re-invest 4% of their local revenues in Swiss film and TV productions. switzerland netflix

Dubbed “Lex Netflix,” the Swiss law –– which is modeled on European regulations that don’t apply in the country as it’s not part of the E.U. –– is sparking plenty of controversy.

“Lex Netflix” is being opposed by Swiss groups of different political stripes who say it goes against the principles of the country’s fiercely free-market economy. In a similar vein, Swiss consumer organizations say they fear that investment obligations will prompt streamers to raise subscription fees so that consumers will end up footing the bill for what they consider to be handouts to producers.

“We have the greatest respect for the democratic decision-making of the Swiss people, and we will await the outcome of the referendum,” a Netflix spokesperson said.

“While we have not been involved in the preparation and submission of this referendum request, we understand that consumers are questioning the benefits of such a regulation and its impact on consumer choice,”

the spokesperson added.

On the other side of the fence, the Locarno Film Festival this week launched an appeal urging Swiss citizens to vote “yes” to “Lex Netflix.”

“The Locarno Film Festival shares the view that all audiovisual industry players operating in Switzerland should be required to reinvest an equal percentage of their domestic revenue in Swiss audiovisual productions,” the Swiss temple of indie cinema said in its appeal. switzerland netflix

Swiss TV networks are subject to a 4% of total revenue investment obligation.

Locarno, which has a very active industry component that acts as a catalyst for co-productions between Swiss and European producers, believes Switzerland should adopt regulation prompted by the E.U.’s Audiovisual Media Services Directive (AVMS), which is currently in various stages of implementation across Europe.

Local AVMS rules currently require Netflix and other streamers to invest 26% of local revenues in French productions, while the re-investment percentage in Spain is a much lower 5%. It is expected to end up amounting to 20% in Italy where the law implementing the directive has not been passed yet.

Switzerland’s Ticino Film Commission is also urging voters to vote “yes” to “Lex Netflix” and has gathered statements from local producers to rally support.

“The investment obligation will help the industry contend with international competition and also export more productions,”

said Heinz Dill, president of Swiss Producers’ Association SFP, who added that “it will not cost taxpayers anything.”

Barbara Miller, who heads ARF/FDS, which represents Swiss directors and screenwriters, said that investment obligations for streamers will be particularly beneficial in boosting the production of Swiss TV series. She noted that these shows in most cases are mounted as international co-productions and would now have better chances of having the initial nugget of their budgets in place.

Switzerland’s culture ministry estimates that if “Lex Netflix” is passed it will inject the equivalent of between roughly $18 million and $30 million into the Swiss film and TV industry. switzerland netflix

In terms of local film production, Netflix’s activity is currently limited to being a co-producer on the upcoming Swiss comedy “Early Birds” which is being made in tandem with Zurich-based hugofilm and CH Media Entertainment. On the TV series side, their latest licensing deals include Swiss family saga “Neumatt” from Zodiac Pictures and SRF which, after airing on public Swiss television last year, will launch on the streaming giant this year.

Opposition to the legislation cites the increase in costs that will be eventually passed to consumers, as well as the restriction on the freedom of consumption considering the 30% European content requirement.