French parliamentarians approve ‘YouTube tax’

French parliamentarians have approved an amendment to the country’s budget that is intended to see the advertising revenues of free online video services such as YouTube taxed for the first time.

Despite opposition from the government, which rejected the tax during discussions on its budget for 2017 a month ago, the country’s National Assembly has approved the so-called ‘YouTube tax’, which will be imposed on websites posting free or paid-for videos that are accessible in France.

The proposed tax envisages a 2% levy on advertising from online videos, rising to 10% when advertising receipts are linked to works deemed pornographic or violent.

Online services focusing on news, where video is a ‘secondary’ activity, will be exempted.

The controversial tax is intended to create a level playing field between free and pay platforms and between French and international players. Currently, works distributed via pay TV platforms or pay VOD services are taxed to help finance content creation in the country, while works distributed on free platforms are not taxed.

The tax has been criticised as difficult to enforce and likely to deliver negligible revenues. Budget secretary of state Christian Eckert is on record as saying that it will deliver only about “a million euros” and fails to address the more important issue of the aggressive tax avoidance strategies of global internet companies.

Internet industry group the Association des Services Intneret Communitaires (ASIC), which in a nod to France’s home-grown YouTube rival refers to the proposal as the ‘Dailymotion tax’, also slammed the plan.

ASIC said that the measure was discriminatory because the companies affected already contributed to content creation through licensing and revenue-share agreements and argued that it sent a “very negative signal” about the attractiveness of France as a place to do business.

ASIC claimed that the “misplaced arguments” in favour of the tax had been promoted by the Centre Nationale du Cinéma et de L’Image Animée (CNC), which is charged with dispensing money received from taxation dedicated to supporting content creation.

Rights collecting society the Société des Auteurs et Compositeurs Dramatiques (SACD) on the other hand welcomed the National Assembly’s vote. the SACD said that the proposed tax would contribute to the modernisation of the financing of content creation and ensure equality of treatment between platforms. The organisation urged the French upper house, the Senate, to endorse the move.