More and more pay television subscribers are consuming programs on demand, whether via boxes or on the internet. It is this observation which pushed the tax administration to review the VAT applied to these services. Until now, Canal+ and OCS benefited from a reduced rate of 10%, but according to Bercy, this regime is no longer suitable. Replay and video-on-demand offers now represent an essential part of subscriptions, just like streaming platforms like Netflix or Disney+. Result: these services must be taxed at 20%.
New tax situation
Justice has just vindicated this analysis. In a dispute between OCS and the administration, the Paris administrative court of appeal ruled that the replay was not a simple “bonus” for subscribers. As reported by the site The Informedthe judges pointed out several decisive elements: a significant part of viewing time (49%) is devoted to on-demand content, sometimes accessible several months after its initial broadcast. Some programs have never even been broadcast live. Suffice it to say that, for magistrates, replay is much more than a secondary service.
This decision could be very expensive for Canal+, which bought OCS last year. The Vivendi subsidiary is facing a tax adjustment of 525 million euros for the period from May 2019 to December 2021. And that's not all: with the case law emerging, the full rate could apply to the all players in the sector, including for the years to come. Enough to disrupt an already weakened economic model.
Canal+ has already reacted by modifying its offers. Since summer 2023, the channel has offered two-part billing: live television and replay (taxed at 10%) on one side, and on-demand services (Canal+ on demand, Apple TV+, Paramount+) taxed at 20%, on the other. This last component is displayed at only 2 euros per month, a price that raises questions. In fact, these services are worth much more: Apple TV+ costs 10 euros per month and Paramount+ around 8 euros. This division could help limit the tax impact, but it also risks attracting the attention of the tax authorities.
Canal+ has repeatedly warned that this VAT increase could call into question its role as a major player in French film production, a blackmail that regularly comes up when the channel is upset. It has already increased its prices in 2022 and may have to make further adjustments if the decision is confirmed by the Council of State.
The court decision marks a turning point for the channels… but also for subscribers, who could also be affected. An increase in VAT could result in price increases, even if strategies like that of Canal+ attempt to limit the damage. For the moment, the case is not completely closed: an appeal to the Court of Cassation is still possible.
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