Investing in European works:

IRIS Plus

the obligations on VOD providers

IRIS Plus

IRIS Plus 2022-2

Investing in European works: the obligations on VOD providers

European Audiovisual Observatory, Strasbourg, 2022

ISSN 2079-1062

Director of publication – Susanne Nikoltchev, Executive Director

Editorial supervision – Maja Cappello, Head of Department for Legal Information

Editorial team – Francisco Javier Cabrera Blázquez, Julio Talavera Milla, Sophie Valais

Research assistants - Amélie Lacourt, Justine Radel

European Audiovisual Observatory

Authors (in alphabetical order)

Francisco Javier Cabrera Blázquez, Maja Cappello, Julio Talavera Milla, Sophie Valais

Proofreading

Anthony Mills

Editorial assistant – Sabine Bouajaja

Press and Public Relations – Alison Hindhaugh, [email protected]

European Audiovisual Observatory

Publisher

European Audiovisual Observatory

76, allée de la Robertsau, 67000 Strasbourg, France

Tel.: +33 (0)3 90 21 60 00

Fax: +33 (0)3 90 21 60 19

[email protected]

www.obs.coe.int

Cover layout – ALTRAN, France

Please quote this publication as

Cabrera Blázquez F.J., Cappello M., Talavera Milla J., Valais S., Investing in European works: the obligations on

VOD providers, IRIS Plus, European Audiovisual Observatory, Strasbourg, September 2022

Opinions expressed in this publication are personal and do not necessarily represent the views of the

Observatory, its members or the Council of Europe.

Investing in European

works:

the obligations on VOD

providers

Francisco Javier Cabrera Blázquez, Maja Cappello, Julio Talavera Milla,

Sophie Valais

Foreword

Online services are cross-border per nature, at least from a technical standpoint. As such,

VOD services can reach virtually any country on the planet, with no natural barriers or

frequency shortage to prevent this. That is, if the law of the land allows it.

The regulation of VOD in Europe, although based on an EU Directive (the

Audiovisual Media Services Directive - AVMSD), is done at national level. An example of

this is the possibility for member states to introduce financial obligations to promote the

production of European works. Article 13(2) AVMSD leaves plenty of leeway for member

states to introduce (or not!) such obligations on VOD services, and accordingly, there are

important regulatory differences from country to country. In theory, this could mean that

big SVOD services established in one EU country would have to abide by the financial

obligations of that country alone. But the AVMSD clarifies that, “given the direct link

between financial obligations and Member States' different cultural policies, a Member

State is also allowed to impose such financial obligations on media service providers

established in another Member State that target its territory”.

This new report by the European Audiovisual Observatory describes the rules

concerning financial obligations for VOD services in the EU. We ask the following

questions:

◼ What is the current legal framework for promoting the production of European

works in the EU?

◼ What are the resulting obligations on VOD services operating at national and

cross-border level?

◼ What form do these financial obligations take (investment in production,

acquisition of rights, levies etc.)?

Our report includes a country-by-country analysis of the 14 countries that have decided so

far to introduce this kind of obligation and a chapter on the work of ERGA (the European

Regulators Group for Audiovisual Media Services), and dives into recent case law. As a

bonus, we are also publishing a detailed overview table with information about the

national transposition in the EU27, EFTA countries and the UK of the obligations to

promote European works included in Articles 13, 16 and 17 of the AVMSD.

This extensive kind of analysis would not have been possible without the precious

collaboration of the national members of the European Film Agency Directors association

(EFAD) and of the European Platform of Regulatory Authorities (EPRA): my warmest thanks

go to each and every one of them for their very valuable feedback.

Strasbourg, September 2022

Maja Cappello

IRIS Coordinator

Head of the Department for Legal Information

European Audiovisual Observatory

 
 
Table of contents  
 Setting the scene ..................................................................................................... 1 
1.  Audiovisual production in Europe: Film, TV series and TV films ................................................................................... 1 
1.1.  Production volume, episodes and length ........................................................................................................ 1 
1.2.  Origin of audiovisual fiction works .................................................................................................................... 4 
1.3.  Co-production ............................................................................................................................................................ 5 
1.4.  Producers and commissioners of European fiction ...................................................................................... 6 
2.  Audiovisual media services in Europe ..................................................................................................................................... 7 
2.1.  Localised audiovisual media services in Europe ........................................................................................... 9 
2.2.  Revenues and subscribers of VOD services in Europe ............................................................................. 11 
 European legal framework .................................................................................... 13 
1.  The AVMSD rules .......................................................................................................................................................................... 13 
2.  Financial obligations and the country-of-origin principle............................................................................................ 16 
3.  Definitional issues ....................................................................................................................................................................... 19 
3.1.  Low audience and low turnover ....................................................................................................................... 19 
3.2.  Targeting services ................................................................................................................................................. 23 
 National................................................................................................................... 24 
1.  Types of financial obligations ................................................................................................................................................. 24 
2.  National transposition................................................................................................................................................................ 24 
2.1.  BE - Belgium ............................................................................................................................................................ 30 
2.2.  CH - Switzerland .................................................................................................................................................... 35 
2.3.  CZ - Czech Republic .............................................................................................................................................. 36 
2.4.  DE - Germany .......................................................................................................................................................... 37 
2.5.  DK - Denmark .......................................................................................................................................................... 38 
2.6.  ES - Spain .................................................................................................................................................................. 39 
2.7.  FR - France ............................................................................................................................................................... 41 
2.8.  GR - Greece .............................................................................................................................................................. 43 
2.9.  HR - Croatia.............................................................................................................................................................. 44 
2.10. IE - Ireland ................................................................................................................................................................ 45 
2.11. IT - Italy ..................................................................................................................................................................... 46 
2.12. NL – Netherlands .................................................................................................................................................. 47 
2.13. PL - Poland ............................................................................................................................................................... 48 
2.14. PT - Portugal............................................................................................................................................................ 48 

 
 
2.15. RO - Romania .......................................................................................................................................................... 51 
 Cooperation mechanisms ...................................................................................... 53 
1.  Main challenges for national regulatory authorities ...................................................................................................... 53 
2.  The role of ERGA .......................................................................................................................................................................... 55 
2.1.  Cooperation between national regulatory authorities ............................................................................. 55 
2.2.  The formal recognition and reinforcement of the role of ERGA .......................................................... 56 
2.3.  Memorandum of Understanding between NRAs that are members of ERGA .................................. 57 
2.4.  Next steps ................................................................................................................................................................. 61 
3.  Case study: France ....................................................................................................................................................................... 62 
3.1.  Agreements between the CSA and the main foreign-based on-demand AVMS providers ......... 62 
3.2.  Agreement between film organisations and Netflix................................................................................. 63 
 Case law: From an absolute to a relative country-of-origin principle .............. 64 
1.  The European Commission’s decision on Germany’s aid scheme for films ............................................................ 64 
2.  The Netflix v. European Commission case ......................................................................................................................... 66 
3.  Freedom to provide service, and quotas for “national works” .................................................................................... 67 
4.  Freedom to provide services, and access to national film funds funded by levies ............................................. 68 
 State of play ........................................................................................................... 70 
 Annex ...................................................................................................................... 74 
 
   

 
 
Figures 
Figure 1.  Volume of AV fiction produced in Europe (2015-2020) ....................................................................................................... 2 
Figure 2.  Number of AV fiction titles produced by format (2015-2020) .......................................................................................... 3 
Figure 3.  Number of fiction titles by duration of episodes (2015-2020) ......................................................................................... 3 
Figure 4.  Top fiction-producing countries in number of seasons (2020) ......................................................................................... 4 
Figure 5.  Top fiction-producing countries in number of hours (2020) ............................................................................................. 5 
Figure 6.  Number and share of co-productions by format (total 2015-2020) ............................................................................... 6 
Figure 7.  Breakdown of TV channels available in Europe by type of access and transmissions in 2020 – in % ............ 7 
Figure 8.  Breakdown of pay on-demand services available in Europe by business model in 2020 – in number 
of services and % ................................................................................................................................................................................. 8 
Figure 9.  Countries with 8 to 388 TV services aimed at non-domestic markets in 2020 – in number of 
services .................................................................................................................................................................................................... 9 
Figure 10.  Countries with pay on-demand services aimed at non-domestic markets in 2020 – in number of 
services ................................................................................................................................................................................................. 10 
Figure 11.  TV channels aimed at non-domestic markets before and after Brexit, 2018 and 2020 – in number 
of services ........................................................................................................................................................................................... 10 
Figure 12.  EU28 Audiovisual market revenues by segment 2019 – in EUR billion and as a % ............................................. 11 
Figure 13.  EU28 Subscriptions to OTT SVOD 2010-2020 – in subscription million and % of subscriptions, y-o-
y growth ............................................................................................................................................................................................... 12 
Figure 14.  States with financial obligations ............................................................................................................................................... 71 
Figure 15.  Type of financial obligations ....................................................................................................................................................... 72 
 
 
Tables 
Table 1.  Direct investment obligations – rates and bases................................................................................................................ 25 
Table 2.  Indirect investment (levies) – rates and bases .................................................................................................................... 28 
 
   

INVESTING IN EUROPEAN WORKS: THE OBLIGATIONS ON VOD PROVIDERS

Page 1

1. Setting the scene

1.1. Audiovisual production in Europe: Film, TV series and TV

films

1.1.1. Production volume, episodes and length

Over the period 2015-2020, a yearly average of 1 032 titles

(including TV films and TV

series commissioned by television channels or on-demand audiovisual services) were

produced in the European Union, accounting for an average of 20 846 episodes and 13

409 hours.

With the exception of the year 2020, figures for the three indicators grew over

time.

This chapter is mainly based on the most recent reports on market trends in audiovisual production,

audiovisual media services in Europe and, particularly, on the VOD sector, by the Department for Market

Information of the European Audiovisual Observatory. Special thanks to two of their authors, Christian Grece

and Agnes Schneeberger, for peer-reading it before publication.

The term “title” refers to either a TV film or a TV season. Each different season of a series is counted as one

title. See European Commission’s Guidelines on the revised Audiovisual Media Services Directive,

https://ec.europa.eu/commission/presscorner/api/files/document/print/en/qanda_20_1208/QANDA_20_1208_E

N.pdf.

Fontaine, G., 2022, “Audiovisual fiction production in Europe. 2020 figures”, European Audiovisual

Observatory, https://rm.coe.int/audiovisual-fiction-production-in-europe-2020-figures/1680a5d715.

INVESTING IN EUROPEAN WORKS: THE OBLIGATIONS ON VOD PROVIDERS

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Figure 1. Volume of AV fiction produced in Europe (2015-2020)

Source: European Audiovisual Observatory analysis of The European Metadata Group data.

This increase does not appear to have been at the expense of the production of theatrical

films. Just before the COVID pandemic, the production of feature theatrical films in the

European Union surpassed the landmark figure of 2 000 films in 2019 (2 007 films

produced, split into 1 225 fiction films and 782 documentaries), up from 1 827 films in

2016. Even in 2020, in spite of the impact of COVID, 1 400 feature films were produced in

the European Union. Over that same period, the number of admissions remained stable

within the EU, at around 1 000 million admissions (growing from 992 million in 2016 to

1 007 million in 2019).

The most remarkable trend, when it comes to TV and on-demand production, is a

clear shift towards short TV series (those with between 2 and 13 episodes, which can be

used as a proxy for high-end, premium TV series) at the expense of TV films, the

production of which decreased by 21.6% (down to 250 in 2020) while short TV series grew

by 59.6% over the same period from 2015 to 2020. In turn, TV series with more episodes

(between 14 and 52 episodes, as well as those with more than 52 episodes – mostly soap

operas) saw very mild growth over this period. The most common works produced were

TV series with between 2 and 13 episodes per season, accounting for 54% of the titles

and 24% of the hours produced over the five-year period analysed.

Kanzler, M., Simone, P., 2020, “Film Market Trends”, European Audiovisual Observatory,

https://rm.coe.int/focus2020/1680a32252.

Fontaine, G., 2022, “Audiovisual fiction production in Europe. 2020 figures.”, European Audiovisual

Observatory, https://rm.coe.int/audiovisual-fiction-production-in-europe-2020-figures/1680a5d715.

917

932

999

1024

1160

1159

1 032

18634

19083

21177

22224

22300

21655

20 846

12281

12609

13271

14187

14363

13745

13 409

2015 2016 2017 2018 2019 2020 Average 2015-

2020

Titles Episodes Hours

INVESTING IN EUROPEAN WORKS: THE OBLIGATIONS ON VOD PROVIDERS

Page 3

Figure 2. Number of AV fiction titles produced by format (2015-2020)

Source: European Audiovisual Observatory analysis of The European Metadata Group data.

In turn, this shift has had an impact on the length of TV works, with very long works –

mainly TV films (those with a duration longer than 65 minutes) – going down, while all

other categories saw an increase over the period 2015-2020. Although the category which

experienced the highest increase was that of 2-to-13-episode titles, those with a length

of between 36 and 65 minutes ranked at the top by number of titles produced in 2020.

Figure 3. Number of fiction titles by duration of episodes (2015-2020)

Source: European Audiovisual Observatory analysis of The European Metadata Group data.

319

308

292

249

273

250

436

456

525

567

665

696

115

120

122

100

102

2015 2016 2017 2018 2019 2020

TV film 2 to 13 ep. 14 to 52 ep. More than 52 ep.

130

117

176

201

233

259

346

365

413

438

491

521

411

415

371

326

360

300

2015 2016 2017 2018 2019 2020

15' or less 16' to 35' 36' to 65' More than 65'

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Furthermore, first seasons (45% of the TV series) and subsequent seasons (55% of the TV

series) were approximately evenly split over the covered period, with the share of first

seasons even higher (54%) for solely 2-to-13-episode series.

1.1.2. Origin of audiovisual fiction works

Germany (250 titles produced in 2020) is the leading producer of TV series in Europe,

followed at a distance by the UK, France and Spain, with most titles produced by public

service media (PSM). When it comes to hours produced, Greece (1 770 hours produced in

2020) is at the top of the list, followed by Spain, Germany, Poland and Portugal. The high

production figures in Spain, Greece, Portugal, Poland, Hungary and the Czech Republic,

are mostly due to prolific production of soap operas.

Figure 4. Top fiction-producing countries in number of seasons (2020)

Source: European Audiovisual Observatory analysis of The European Metadata Group data.

Idem.

145

131

151

250

Others

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Figure 5. Top fiction-producing countries in number of hours (2020)

Source: European Audiovisual Observatory analysis of The European Metadata Group data.

Nevertheless, when it comes to the production of 2-to-13-episode series – the most

frequent number of episodes –it is the UK at the top of the ranking, both in terms of titles

and hours, with 124 titles and 550 hours produced in 2020. In fact, the UK, as most other

European countries, concentrates most of its production of series on this category of

series (88% of its overall audiovisual fiction production for TV and on-demand services).

Italy, France and the United Kingdom have a specific interest in 2-to-13-episode series,

while Germany and France place a higher-than-average emphasis on TV films.

1.1.3. Co-production

Co-production represents only a meagre 10% of all the production of fiction series in the

EU over the period 2015-2020; even less (5%) if we exclude co-productions between

countries with a shared language. In either case, co-productions mainly took place for 2-

to-13-episode series and TV films. France, Belgium and Germany account for the majority

of co-productions in Europe, followed at a distance by the UK and Austria. However, when

excluding cooperation between countries sharing the same language, the leaders are the

United Kingdom, Germany, the United States (as minority co-producer), France and

Sweden.

Idem.

1464

209

239

260

326

412

423

519

584

983

1144

1197

1311

1433

1471

1770

Others

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Figure 6. Number and share of co-productions by format (total 2015-2020)

Source: European Audiovisual Observatory analysis of The European Metadata Group data.

The main minority co-producing countries outside the EU were the United States

and Canada.

The co-production levels in fiction series are significantly lower than those

for the co-production of theatrical films, accounting for 22% of overall production in the

European Union over the period 2007-2016.

1.1.4. Producers and commissioners of European fiction

Most of the commissioning of European fiction series by audiovisual media services is by

public services, accounting for most of the titles (57% of the total), but private services, in

turn, represent 64% of the hours produced.

The top 20 producers accounted for 38% of overall production of European fiction

and 57% of all hours produced in 2020. When it comes to 2-to-13-episode series, the BBC

Idem.

Talavera, J., 2017, “Film production in Europe – Production volume, co-production and worldwide

circulation”, European Audiovisual Observatory (Council of Europe),

https://rm.coe.int/filmproductionineurope-2017-j-talavera-pdf/1680788952.

189

417

631

232

284

11%

12%

10%

12%

14%

100

200

300

400

500

600

700

TV Film 2 to 13 ep. 14 to 52 ep. More than 52 ep. All

Co-productions (all) Co-productions (non-linguistic)

% Co-productions (All) % -Co-productions (Non-linguistic)

INVESTING IN EUROPEAN WORKS: THE OBLIGATIONS ON VOD PROVIDERS

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led by number of titles (61 titles produced in 2020) followed at a distance by Netflix (49),

ARD (34), ZDF (32) and France Télévisions (30).

When it comes to independent productions, these account for the lion’s share of

audiovisual fiction production in general (66% of the titles and 58% of the hours in 2020),

as well as of the production of 2-to-13-episode fiction series (67% of the titles and 65% of

the hours in 2020).

1.2. Audiovisual media services in Europe

At the end of 2020, there were 13 638 audiovisual media services available in Europe (11

823 of them established in Europe), 10 839 TV channels (with circa half of the services

offered against payment), and 2 799 on-demand services (42% of them pay on-demand

services, out of which two thirds were subscription services).

By 2020, the supply of pay

on-demand services was more concentrated than that of TV channels – 10 countries were

home to 80% of all pay on-demand services and 65% of TV services. The UK was the

market with the greatest supply of national and international TV channels, closely

followed by the Russian Federation and the Netherlands – all three had more than 500

services each. With over 100 services originating from their territories, the main countries

supplying pay on-demand services were Ireland, France, the UK and Spain.

Figure 7. Breakdown of TV channels available in Europe

by type of access and transmissions

in 2020 – in %

Source: European Audiovisual Observatory’s MAVISE database.

Fontaine, G., 2022, “Audiovisual fiction production in Europe. 2020 figures.“, European Audiovisual

Observatory, https://rm.coe.int/audiovisual-fiction-production-in-europe-2020-figures/1680a5d715.

Idem.

Schneeberger, A., 2021, “Audiovisual media services in Europe”, European Audiovisual Observatory,

https://rm.coe.int/audiovisual-media-services-in-europe-2020/1680a2fc29.

Fontaine, G. (Ed.), 2022. Yearbook 2021/2022 Key Trends, European Audiovisual Observatory.

https://rm.coe.int/yearbook-key-trends-2021-2022-en/1680a5d46b.

Europe includes the 41 countries covered by MAVISE (https://mavise.obs.coe.int/) and Morocco.

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Figure 8. Breakdown of pay on-demand services available in Europe

by business model in

2020 – in number of services and %

Source: European Audiovisual Observatory’s MAVISE database

If we exclude local channels, most TV channels (90%) are private; the figure is even

higher if we look at VOD, with 97% of the services privately owned. In addition, most TV

channel suppliers (excluding local channels) in Europe are based in the UK (586 channels

in 2020), Russia (524), the Netherlands (515), Turkey (385), Spain (380) and Germany

(362). As for pay video-on-demand services, 80% of the services were concentrated in only

11 countries, with most services established in Ireland (188 services in 2020), France

(141), UK (140), Spain (104) and Germany (96).

Between 2016 and 2020, the revenues of the traditional players more or less

stagnated, while the growth of the top 100 players was largely driven by the new SVOD

players. Pure SVOD players – namely Netflix, Amazon and DAZN – accounted

cumulatively for more than 75% of the revenue growth registered during this period, at

the top 100 level. Furthermore, the top 20 European audiovisual groups by revenue in

2020 accounted for 69% of the market. American Sky topped the list (13.5%), followed by

the German public service media ARD (5.3%) and Netflix (Europe) (5%). SVOD and pay TV

stand out as the most concentrated audiovisual market segments in Europe. A total of

94% of SVOD subscriptions are cumulatively accounted for by top 20 OTT platforms,

while 72% of pay TV subscriptions are attributable to top 20 pay TV operators.

“Europe” includes the 41 countries covered by MAVISE (https://mavise.obs.coe.int/) and Morocco.

Schneeberger, A., 2021, “Audiovisual media services in Europe”, European Audiovisual Observatory,

https://rm.coe.int/audiovisual-media-services-in-europe-2020/1680a2fc29.

Idem.

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1.2.1. Localised audiovisual media services in Europe

There is a trend within the European Union whereby an increasing number of audiovisual

media services are adapted to the different national markets, either as broadcasters in

different linguistic versions or on-demand services with local-language user interfaces.

These services aimed at non-domestic markets (or localised services) tend to be

predominantly owned by large US media corporations. In addition, the business model is

built on the maximisation of scale in terms of catalogues and geographical coverage.

the end of 2020, 24% of all TV channels broadcasting from Europe were aimed at non-

domestic markets; the share is even higher when it comes to pay on-demand services

(53%).

A total of 91% of TV channels aimed at non-domestic markets were based in just

10 countries, with the Netherlands (388 channels in 2020), the UK (235) and Spain (212)

topping the list. The concentration level is even higher when it comes to VOD, with

services aimed at non-national markets accounting for 96% of the total. In this case, the

ranking is topped by Ireland (180 services in 2020), the UK (106) and Spain (81).

Figure 9. Countries with 7 to 388 TV services aimed at non-domestic markets in 2020 – in

number of services

Source: European Audiovisual Observatory’s MAVISE database.

Schneeberger, A., 2021, “Audiovisual media services in Europe”, European Audiovisual Observatory,

https://rm.coe.int/audiovisual-media-services-in-europe-2020/1680a2fc29.

Idem.

1 359

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Figure 10. Countries with pay on-demand services aimed at non-domestic markets in 2020 – in

number of services

Source: European Audiovisual Observatory’s MAVISE database.

Moreover, around 60% of the localised audiovisual media services were established in just

three countries: the Netherlands, UK and Spain. After Brexit, a flight of localised TV

channels from the UK has taken place, with most of them relocating to the Netherlands

and Spain. In turn, 61% of localised pay on-demand services were based in Ireland, the UK

and Spain over the same period.

Figure 11. TV channels aimed at non-domestic markets before and after Brexit, 2018 and 2020

– in number of services

Source: European Audiovisual Observatory’s MAVISE database.

Idem.

600

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1.2.2. Revenues and subscribers of VOD services in Europe

The VOD market has experienced a gigantic leap over the last decade with EU28 revenues

going from EUR 388.9 million in 2010 to EUR 11.6 billion in 2020, mainly thanks to the

hike of SVOD, which in 2020 accounted for 84% of the VOD market revenues. In spite of

this, VOD still represents a meagre slice of the audiovisual pie in Europe, which amounts

to EUR 114,5 billion – with SVOD accounting for 6% of the market revenues, and an

additional 1% from TVOD revenues in 2019.

Figure 12. EU28 Audiovisual market revenues by segment 2019 – in EUR billion and as a %

Source: European Audiovisual Observatory, Ampere Analysis, Warc, EBU/MIS, company/public reports

It is true that confinement due to the COVID pandemic has increased the number of

subscriptions to SVOD services. However, the trend was already quite remarkable. In

2020, the figure of 140.7 million subscriptions in the EU28 (36% year-on-year growth, up

from 103.2 million subscriptions in 2019) was reached. The launch of Netflix and other

services during 2011 and 2012 in many European countries accelerated subscription

figures, which went from 3 million subscriptions in 2012 to 7 million subscriptions in

2013; the launch of direct-to-consumer streaming services by some pay TV, commercial

TV, and telecom companies, as well as tech players, has boosted these figures. The

current y-o-y growth figures appear to confirm that, as SVOD becomes mainstream, the

market will continue to grow in the years to come.

Grece, C. 2021. VOD Trends in Europe. European Audiovisual Observatory. https://rm.coe.int/grece-trends-

on-the-eu-vod-market-9-12-2021-kipa-summit-warsaw/1680a4d1c7.

Cinema gross box-office 7,2

TVOD revenues 1,6 1%

SVOD revenues 7,1 6%

Pay-TV revenues 34,5 30%

Advertising TV 31,2 27%

Advertising Radio 5,3 5%

Physical Video 1,8 2%

Public funding 25,8 23%

EUR 114,5 billion

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Figure 13. EU28 Subscriptions to OTT SVOD 2010-2020 – in subscription million and % of

subscriptions, y-o-y growth

Source: Ampere Analysis

0,3

0,7

3,0

7,0

16,5

28,7

42,0

54,4

73,6

103,2

140,7

151%

334%

135%

136%

74%

46%

30%

35%

40%

36%

50%

100%

150%

200%

250%

300%

350%

400%

100

120

140

160

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

OTT SVOD subscriptions OTT SVOD Subscriptions year-on-year growth rate

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2. European legal framework

2.1. The AVMSD rules

The EU's Audiovisual Media Services Directive (AVMSD)

governs EU-wide coordination of

national legislation with regard to all audiovisual media. These include all kinds of

services, from TV broadcasts to on-demand services and, since revision of the Directive in

2018, also video-sharing platforms. The AVMSD regulates a wide array of issues, such as

incitement to hatred, accessibility for people with disabilities, jurisdiction, major events,

advertising, protection of minors, and the promotion and distribution of European works.

The directive is of EEA relevance, which implies its transposition also in Norway, Iceland

and Liechtenstein. These countries are therefore covered in this report. Moreover, since

Switzerland has chosen to introduce rules inspired by the AVMSD in the field of financial

obligations, the report covers this country as well. On the other hand, the UK has chosen

to transpose the AVMSD, but without introducing financial obligations, and is therefore

included in the maps for the sake of completeness.

The EU promotes European works on TV and VOD through the quota and financing

provisions of the AVMSD, notably through its articles 13, 16 and 17. For TV broadcasting,

they envisage the following:

◼ At least 50% of the broadcasting time must be dedicated to European works

(Article 16 AVMSD).

◼ A minimum of 10% of broadcasting time, or, alternatively, at least 10% of the

broadcaster’s programming budget has to be dedicated to works of independent

European producers (Article 17 AVMSD).

These rules are in force since they were originally introduced by the predecessor to the

AVMSD, the Television without Frontiers Directive (TwFD) of 1989.

At the time, no

obligations were introduced for on-demand AVMS for the simple reason that these

services did not exist at the time. Such rules were introduced in the revision of the TwFD

Consolidated text (as modified by Directive (EU) 2018/1808): Directive 2010/13/EU of the European

Parliament and of the Council of 10 March 2010 on the coordination of certain provisions laid down by law,

regulation or administrative action in Member States concerning the provision of audiovisual media services

(Audiovisual Media Services Directive) (codified version) (Text with EEA relevance),

https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX%3A02010L0013-20181218.

Council Directive 89/552/EEC of 3 October 1989 on the coordination of certain provisions laid down by

Law, Regulation or Administrative Action in Member States concerning the pursuit of television broadcasting

activities, https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=celex%3A31989L0552.

INVESTING IN EUROPEAN WORKS: THE OBLIGATIONS ON VOD PROVIDERS

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in 2007

(later codified into the 2010 version of the AVMSD),

but were of a rather

general nature: EU member states had to ensure that on-demand AVMS promoted, “where

practicable and by appropriate means”, the production of and access to European works.

Such promotion “could relate, inter alia, to the financial contribution made by such

services to the production and rights acquisition of European works or to the share and/or

prominence of European works in the catalogue of programmes offered by the on-demand

audiovisual media service”.

At the time, it was considered that the early stage of development of on-demand

AVMS required a light legislative touch, hence the relatively flexible rules introduced in

2007. Ten years later, the growing importance of VOD services led the EU to introduce a

more stringent set of rules:

◼ Article 13(1) AVMSD sets a 30% share of European works and a prominence

obligation with regard to those works (Article 13(1) AVMSD).

◼ Article 13(2) provides that member states may also require AVMS providers (both

broadcasters and on-demand AVMS) under their jurisdiction to contribute

financially to the production of European works, including via direct investment in

content and contribution to national funds. If member states decide to introduce

financing obligations, they may also require AVMS providers targeting audiences

in their territories, but established in other member states, to make such financial

contributions, which shall be proportionate and non-discriminatory. When

targeting audiences are included in the scope, the financial contribution shall be

based only on the revenues earned in the targeted member states. If the member

state where the provider is established imposes such a financial contribution, it

shall take into account and deduct any financial contributions imposed by

targeted member states.

The purpose of the AVMSD in this regard is to “promote the production and distribution of

European works and thus contribute actively to the promotion of cultural diversity.”

(Recital 69 AVMSD 2010). The final objective is cultural diversity, and this is achieved

through promotion AND distribution.

The quota obligations of Article 13(1) AVMSD (a 30% share of European works,

and sufficient prominence) concern distribution, or access to content. Concerning the

promotion of production, it can be argued that promoting the distribution of European

works indirectly helps their production. Increased demand (from broadcasters) will

The rules were originally introduced by Directive 2007/65/EC, which amended the TwFD, see https://eur-

lex.europa.eu/legal-

content/EN/TXT/?uri=uriserv%3AOJ.L_.2007.332.01.0027.01.ENG&toc=OJ%3AL%3A2007%3A332%3ATOC.

Directive 2010/13/EU of the European Parliament and of the Council of 10 March 2010 on the coordination

of certain provisions laid down by law, regulation or administrative action in Member States concerning the

provision of audiovisual media services (Audiovisual Media Services Directive) (Text with EEA relevance),

https://eur-lex.europa.eu/legal-content/EN/ALL/?uri=celex%3A32010L0013.

The obligations contained in Article 13(1) and (2) AVMSD do not apply to media service providers with a low

turnover or a low audience. Member States may also waive such obligations or requirements where they

would be impracticable or unjustified by reason of the nature or theme of the audiovisual media services in

question (Article 13(6) AVMSD). See section 2.3.1. of this publication.

INVESTING IN EUROPEAN WORKS: THE OBLIGATIONS ON VOD PROVIDERS

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promote supply (from producers). And yet, the EU legislator seems to think that promoting

demand via quota obligations is not enough, since it does not impose but nevertheless

allows the promotion of the supply side via the introduction of financial obligations.

Recital 36 AVMSD 2018 states: “In order to ensure adequate levels of investment in

European works, Member States should be able to impose financial obligations on media

service providers established on their territory.” Actually, the Directive goes as far as

listing the ways in which this promotion may be achieved: According to the same Recital,

“Those obligations can take the form of direct contributions to the production of and

acquisition of rights in European works. The Member States can also impose levies

payable to a fund, on the basis of the revenues generated by audiovisual media services

that are provided in and targeted towards their territory.” Moreover, the Directive clarifies

that, “given the direct link between financial obligations and Member States' different

cultural policies, a Member State is also allowed to impose such financial obligations on

media service providers established in another Member State that target its territory”. It

adds: “In that case, financial obligations should only be charged on the revenues

generated through the audience in the targeted Member State.” This is a clear departure

from the country-of-origin (COO) principle, which is the basis upon which the whole

architecture of the AVMSD is built.

Why has the EU allowed the introduction of financial obligations for broadcasters

and on-demand AVMS? Is promoting demand not enough? Actually, European states

already promote the production of cinema films and other audiovisual works through

state aid, that is, direct funding or tax incentives. According to the European Commission’s

cinema communication of 2013,

“state aid is important to sustain European audiovisual

production”. The communication adds: “It is difficult for film producers to obtain a

sufficient level of upfront commercial backing to put together a financial package so that

production projects can proceed. The high risk associated with their businesses and

projects, together with the perceived lack of profitability of the sector, make it dependent

on state aid.”

Having said this, it is necessary to highlight here that financial obligations are not

state aid. And this is important, since this means that imposing financing obligations on

broadcasters and on-demand AVMS becomes an additional way of facilitating the

financing of European works without the corset of the EU state aid rules that are included

in the treaties. Said otherwise, financial obligations are added to state aid to increase the

funding possibilities of film and audiovisual producers.

See section 2.2. of this publication.

Communication from the Commission on State aid for films and other audiovisual works; Text with EEA

relevance, OJ C 332, 15.11.2013, p. 1–11,

https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=celex%3A52013XC1115%2801%29.

INVESTING IN EUROPEAN WORKS: THE OBLIGATIONS ON VOD PROVIDERS

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2.2. Financial obligations and the country-of-origin principle

The country-of-origin principle has been a cornerstone of the AVMSD since the inception

in 1989 of the TwFD.

In its Recitals 33 and 34, the 2010 version of the AVMSD

explained the rationale for the introduction of this principle (emphasis added):

(33) The country of origin principle should be regarded as the core of this Directive, as it is

essential for the creation of an internal market. This principle should be applied to all

audiovisual media services in order to ensure legal certainty for media service providers as

the necessary basis for new business models and the deployment of such services. It is also

essential in order to ensure the free flow of information and audiovisual programmes in

the internal market.

(34) In order to promote a strong, competitive and integrated European audiovisual

industry and enhance media pluralism throughout the Union, only one Member State

should have jurisdiction over an audiovisual media service provider and pluralism of

information should be a fundamental principle of the Union.

The AVMSD was revised in 2018

and, while it maintained the country-of-origin principle

intact, it introduced a derogation thereto regarding the promotion of EU works on on-

demand services.

Article 13(1) AVMSD requires that providers of on-demand audiovisual media

services should promote the production and distribution of European works by ensuring

that their catalogues contain a 30% share of European works and that they are given

sufficient prominence.

With regard to the principle of the country of origin, the European

Commission has clarified

that “it is for the country of origin to ensure that on-demand

providers under its jurisdiction comply with the obligation to ensure the share of

European works in their catalogues”. And further: “If a VOD provider falling under the

jurisdiction of a Member State offers different national catalogues in other Member

For more information on the Television without Frontiers Directive see: https://eur-lex.europa.eu/legal-

content/EN/TXT/?uri=LEGISSUM%3Al24101.

Directive 2010/13/EU of the European Parliament and of the Council of 10 March 2010 on the coordination

of certain provisions laid down by law, regulation or administrative action in Member States concerning the

provision of audiovisual media services (Audiovisual Media Services Directive) (Text with EEA relevance),

https://eur-lex.europa.eu/legal-content/EN/ALL/?uri=celex%3A32010L0013.

Directive (EU) 2018/1808 of the European Parliament and of the Council of 14 November 2018 amending

Directive 2010/13/EU on the coordination of certain provisions laid down by law, regulation or administrative

action in Member States concerning the provision of audiovisual media services (Audiovisual Media Services

Directive) in view of changing market realities, https://eur-lex.europa.eu/eli/dir/2018/1808/oj.

This obligation does not apply, however, to media service providers with a low turnover or a low audience.

Member States may also waive such obligations or requirements where they would be impracticable or

unjustified by reason of the nature or theme of the audiovisual media services in question (Article 13(6)

AVMSD).

Communication from the Commission Guidelines pursuant to Article 13(7) of the Audiovisual Media Services

Directive on the calculation of the share of European works in on-demand catalogues and on the definition of

low audience and low turnover 2020/C 223/03 C/2020/4291,

https://eur-lex.europa.eu/legal-

content/EN/TXT/?uri=uriserv:OJ.C_.2020.223.01.0010.01.ENG&toc=OJ:C:2020:223:TOC.

INVESTING IN EUROPEAN WORKS: THE OBLIGATIONS ON VOD PROVIDERS

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States, it is the responsibility of the Member State of jurisdiction (i.e. the country of origin)

to enforce the obligation related to the share of European works with regard to all the

various national catalogues.”

As mentioned above, the AVMSD allows a member state to impose financial

obligations not only on media service providers (linear and non-linear) established on

their territory but also (and here comes the exception to the country-of-origin principle)

on media service providers established in another member state that target its territory.

Such financial obligations must be proportionate and non-discriminatory, and according

to Article 13(3) AVMSD they must be based only on the revenues earned in the targeted

member states. Moreover, if the member state where the provider is established imposes

such a financial contribution, it must take into account any financial contributions

imposed by targeted member states. Any financial contribution must also comply with

Union law, in particular with state aid rules.

The rationale for this exception is explained in Recital 36 of the revised AVMSD

(emphasis added):

(36) In order to ensure adequate levels of investment in European works, Member States

should be able to impose financial obligations on media service providers established on

their territory. Those obligations can take the form of direct contributions to the

production of and acquisition of rights in European works. The Member States could also

impose levies payable to a fund, on the basis of the revenues generated by audiovisual

media services that are provided in and targeted towards their territory. This Directive

clarifies that, given the direct link between financial obligations and Member States'

different cultural policies, a Member State is also allowed to impose such financial

obligations on media service providers established in another Member State that target its

territory. In that case, financial obligations should only be charged on the revenues

generated through the audience in the targeted Member State. Media service providers

that are required to contribute to film funding schemes in a targeted Member State should

be able to benefit in a non-discriminatory way, even in the absence of an establishment in

that Member State, from the aid available under respective film funding schemes to media

service providers.

Despite the letter of the AVMSD and the clarification introduced by the Commission in its

Guidelines,

there was some political wrangling about the application of the country-of-

origin principle regarding Article 13(1) AVMSD. In Spain, a regional party wanted the

future law implementing the revised AVMSD to include reference to a quota of films made

in the Catalan language that would apply to SVOD services not under Spanish jurisdiction,

which in the view of the government was not possible since Netflix does not fall under

Spanish jurisdiction. The regional party in question mentioned France and Italy as

The obligations contained in Article 13(1) and (2) AVMSD do not apply to media service providers with a low

turnover or a low audience. Member States may also waive such obligations or requirements where they

would be impracticable or unjustified by reason of the nature or theme of the audiovisual media services in

question (Article 13(6) AVMSD).

See section 2.3.1.2. of this publication.

INVESTING IN EUROPEAN WORKS: THE OBLIGATIONS ON VOD PROVIDERS

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examples of the contrary situation.

However, France does not apply any catalogue quota

to services outside its jurisdiction.

In the case of Italy, the draft Decree originally

presented by the government set a quota of at least 30% European works, of which at

least 50% must be original Italian works produced by independent producers, which

applied to targeting services as well.

However, both the Italian media regulator Agcom

and the Consiglio di Stato

requested that this provision be modified, as the possible

derogation from the country-of-origin principle is allowed by the Directive only with

respect to the obligation to make a financial contribution as per Article 13(2). Moreover,

the Camera dei Deputati (lower house of the Italian Parliament) made the same request.

Accordingly, the adopted Decreto legislativo,

in its Article 55(3), clarifies that only the

financing obligations apply to targeting services that are not under Italian jurisdiction

(see infra), while the quota and prominence obligations apply only to services under

Italian jurisdiction.

See e.g. https://www.elmundo.es/cataluna/2021/12/02/61a899a8fc6c83cf5b8b45af.html.

See Article 27 of the AVMS Decree. See also Le Roy M., “Tout ce que vous avez toujours voulu savoir sur le

nouveau dcret SMAD... sans jamais oser le demander” , Lgipresse #396, October 2021.

See Article 55(3) of the. Atto di Governo n. 288 - Schema di decreto legislativo recante attuazione della direttiva

(UE) 2018/ 1808 recante modifica della direttiva 2010/13/UE, relativa al coordinamento di determinate disposizioni

legislative, regolamentari e amministrative degli Stati membri concernenti la fornitura di servizi di media

audiovisivi, in considerazione dell'evoluzione delle realtà del mercato,

http://documenti.camera.it/apps/nuovosito/attigoverno/Schedalavori/getTesto.ashx?file=0288.pdf&leg=XVIII#

pagemode=none.

Agcom, Parere relativo allo schema di decreto legislativo recante attuazione della Direttiva (UE) 2018/1808 del

Parlamento europeo e del Consiglio, del 14 novembre 2018, recante modifica della direttiva 2010/13/UE, relativa al

coordinamento di determinate disposizioni legislative, regolamentari e amministrative degli Stati membri

concernenti la fornitura di servizi di media audiovisivi (direttiva sui servizi di media audiovisivi), in considerazione

dell'evoluzione delle realtà del mercato,

https://www.agcom.it/documents/10179/24308804/Comunicazione+14-09-2021/18da7ce0-d6a6-4d1d-ba00-

07b8edd30307?version=1.0.

Consiglio di Stato, Sezione Consultiva per gli Atti Normativi, Adunanza di Sezione del 21 settembre 2021, numero

affare 00944/2021,

http://www.dirittodeiservizipubblici.it/sentenze/sentenza.asp?sezione=dettsentenza&id=7004.

Camera dei Deputati, Parere delle Commissioni riunite VII (Cultura, scienza e istruzione) e IX (Trasporti, poste e

telecomunicazioni), 21 October 2021,

https://www.camera.it/leg18/824?tipo=A&anno=2021&mese=10&giorno=21&view=&commissione=0709#dat

a.20211021.com0709.allegati.all00010.

Decreto Legislativo 8 novembre 2021, n. 208 Attuazione della direttiva (UE) 2018/1808 del Parlamento europeo e

del Consiglio, del 14 novembre 2018, recante modifica della direttiva 2010/13/UE, relativa al coordinamento di

determinate disposizioni legislative, regolamentari e amministrative degli Stati membri, concernente il testo unico

per la fornitura di servizi di media audiovisivi in considerazione dell'evoluzione delle realta' del mercato.

(21G00231) (GU Serie Generale n.293 del 10-12-2021 - Suppl. Ordinario n. 44),

https://www.gazzettaufficiale.it/atto/serie_generale/caricaDettaglioAtto/originario?atto.dataPubblicazioneGaz

zetta=2021-12-10&atto.codiceRedazionale=21G00231&elenco30giorni=true.

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2.3. Definitional issues

2.3.1. Low audience and low turnover

2.3.1.1. The rationale for the exemption

Article 13(6) AVMSD excludes media service providers with a low turnover or a low

audience from the quota and prominence obligations under Article 13(1) AVMSD, as well

as from financial obligations imposed under Article 13(2) AVMSD. Recital 40 of the revised

AVMSD provides an explanation for this exemption (emphasis added):

In order to ensure that obligations relating to the promotion of European works do not

undermine market development and in order to allow for the entry of new players in the

market, providers with no significant presence on the market should not be subject to such

requirements. This is particularly the case for providers with a low turnover or low

audience.

Recital 40 further provides ways in which a low audience or a low turnover can be

determined (emphasis added):

A low audience can be determined, for example, on the basis of a viewing time or sales,

depending on the nature of the service, while the determination of low turnover should

take into account the different sizes of audiovisual markets in Member States. It might

also be inappropriate to impose such requirements in cases where, given the nature or

theme of the audiovisual media services, they would be impracticable or unjustified.

2.3.1.2. The Commission’s Guidelines

Pursuant to Article 13(7) of the AVMSD, the European Commission has provided

Guidelines

regarding the calculation of the share of European works in the catalogues of

on-demand providers and the definition of low audience and low turnover.

Communication from the Commission Guidelines pursuant to Article 13(7) of the Audiovisual Media Services

Directive on the calculation of the share of European works in on-demand catalogues and on the definition of

low audience and low turnover 2020/C 223/03 C/2020/4291,

https://eur-lex.europa.eu/legal-

content/EN/TXT/?uri=uriserv:OJ.C_.2020.223.01.0010.01.ENG&toc=OJ:C:2020:223:TOC.

See Chapter 4 of this publication for more information about co-operation between NRAs for the

application of these guidelines.

INVESTING IN EUROPEAN WORKS: THE OBLIGATIONS ON VOD PROVIDERS

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2.3.1.2.1. Distinction between exemptions established by Union and national law

The aim of the exemptions provided for in Article 13(6) AVMSD is not to replace the

exemptions established at the national level, which define the scope of the contribution

obligations, but to provide safeguards for cross-border providers. If a member state has in

place or introduces obligations for media service providers to contribute financially to the

production of European works and these obligations are limited to providers established

in that member state, the guidelines do not apply.

Member states applying the financial contribution obligations to providers

established in other member states need to respect the principle of non-discrimination.

Therefore, if they have exemptions in place or introduce exemptions at national level

applicable to providers established in their territory, these exemptions also need to be

applied in a non-discriminatory manner to cross-border providers, even if the thresholds

are higher than the ones indicated in these guidelines.

2.3.1.2.2. Low turnover

The threshold for low turnover could be identified by reference to the concept of micro

enterprise developed in the Recommendation 2003/361/EC concerning the definition of

micro, small and medium-sized enterprises,

specifically based on the turnover threshold

used in the definition of micro enterprise (i.e. enterprises with a total annual turnover not

exceeding EUR 2 million). The annual turnover of the enterprise should be determined in

accordance with the provisions of the Recommendation 2003/361/EC, thus taking into

account also the turnover of partner and linked enterprises.

Commission Recommendation of 6 May 2003 concerning the definition of micro, small and medium-sized

enterprises (Text with EEA relevance) (notified under document number C(2003) 1422),

https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=celex%3A32003H0361.

According to Article 3(3) of the Recommendation, "Linked enterprises" are “enterprises which have any of

the following relationships with each other:

(a) an enterprise has a majority of the shareholders' or members' voting rights in another enterprise;

(b) an enterprise has the right to appoint or remove a majority of the members of the administrative,

management or supervisory body of another enterprise;

entered into with that enterprise or to a provision in its memorandum or articles of association;

(d) an enterprise, which is a shareholder in or member of another enterprise, controls alone, pursuant to an

agreement with other shareholders in or members of that enterprise, a majority of shareholders' or members'

voting rights in that enterprise.”

According to Article 3(2), 2. "Partner enterprises" are “all enterprises which are not classified as linked

enterprises within the meaning of paragraph 3 and between which there is the following relationship: an

enterprise (upstream enterprise) holds, either solely or jointly with one or more linked enterprises within the

meaning of paragraph 3, 25 % or more of the capital or voting rights of another enterprise (downstream

enterprise).

However, an enterprise may be ranked as autonomous, and thus as not having any partner enterprises, even if

this 25 % threshold is reached or exceeded by the following investors, provided that those investors are not

linked, within the meaning of paragraph 3, either individually or jointly to the enterprise in question:

(a) public investment corporations, venture capital companies, individuals or groups of individuals with a

regular venture capital investment activity who invest equity capital in unquoted businesses ("business

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At the same time, Recital 40 of the AVMSD provides that “the determination of low

turnover should take into account the different sizes of audiovisual markets in Member

States”. Therefore, the Commission considers that member states with smaller national

audiovisual markets should be able to determine lower turnover thresholds. Based on the

overall market characteristics, such lower thresholds could be justified and proportionate,

provided they exempt enterprises that have a share of less than 1% of the overall

revenues in the national audiovisual markets concerned.

2.3.1.2.3. Low audience

The concept of audience for VOD services is not an established one and no standardised

industry measurements are available across member states. Therefore, the Commission

considers that the most appropriate method for measuring audience in the VOD sector is

the sales of the services, which will be determined depending on the type of VOD

service:

◼ Subscription Video on Demand (SVOD): number of active users of a particular

service, e.g. the number of paying subscribers. In case of subscribers that pay for

bundled services which include also a VOD account, the audience of the VOD

services might not be accurately represented by the number of paying subscribers

of those bundled services as a whole, as some might not be VOD users. In such

cases, national authorities may apply a measurement based on users who have in

fact accessed the video content of the service within a defined time period. In all

these cases, the period taken into consideration should be appropriate and

meaningful (i.e. not too short), set in advance, and not burdensome in terms of

implementation.

◼ Transactional Video on Demand (TVOD): number of unique customers/unique

accounts used for acquisition of works. Active users could refer, for example, to

users that have acquired at least one title in the catalogue over a defined time

period.

◼ Advertising Video on Demand (AVOD): number of unique visitors. The audience

could be determined as an average of active users for a defined time period.

In practice, the audience should be determined in terms of the share of active users

attained by a particular service: The audience of a VOD service would be the number of its

users divided by the total number of users of (similar) VOD services available on the

national market and multiplied by 100 to obtain a percentage. Providers with a low

angels"), provided the total investment of those business angels in the same enterprise is less than EUR

1250000;

(b) universities or non-profit research centres;

(d) autonomous local authorities with an annual budget of less than EUR 10 million and fewer than 5000

inhabitants.”

See also Recital 40 AVMSD 2018. Member States may, however, use alternative criteria.

INVESTING IN EUROPEAN WORKS: THE OBLIGATIONS ON VOD PROVIDERS

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number of active users would have no significant presence in the market, thus justifying

the application of the Article 13(6) AVMSD exemption.

The main SVOD providers in Europe tend to have a share that goes well beyond

1% in the national markets where they are present.

The Commission considers it

appropriate, in principle, to exempt from the obligations under Article 13 AVMSD those

providers that have an audience share of less than 1% in the member state concerned.

With regard to Article 13(2), this means that these providers are exempted by the targeted

member state from the obligation to contribute financially to the production of European

works.

2.3.1.2.4. Adjustments to take account of the specific nature of financial contributions

When determining the appropriate thresholds, the different impacts of the two possible

types of obligations on cross-border providers should be considered. Direct contributions

to production and acquisition of rights imply a higher entrepreneurial effort than the

payment of a levy to a fund, and depend on the availability of European works, including

production projects in which a provider may invest with the available resources.

In some member states, depending in particular on the size and structure of the

audiovisual market, it may be considered important to apply financial contribution

obligations also to on-demand services with a turnover lower than EUR 2 million or with

an audience share of less than 1% as well as cross-border linear services with an audience

share below 2%, in particular pay TV services, as their presence on the national markets

may still be deemed important. In such cases, member states may decide to apply lower

thresholds, in duly justified cases and in line with their cultural policy objectives,

including the objective to ensure the sustainability of national audiovisual and film

funding systems. These thresholds and the financial contributions imposed should

consider the financial capacity of the service, should respect the principles of non-

discrimination and proportionality, should not undermine market development, and

should allow for the entry of new players on the market.

As regards cross-border direct investment obligations, the Commission invites

member states, in particular those with larger audiovisual markets, to consider also

exempting enterprises having a total turnover above EUR 2 million, by setting a higher

threshold, or at least making them subject to less onerous investment obligations –

taking account, in particular, of the possible difficulties associated with finding

audiovisual productions to invest in with the available resources in the member states

concerned.

The Commission quotes here “Main OTT SVOD groups in Europe by estimated number of subscribers”

(December 2018), published as part of the European Audiovisual Observatory Yearbook 2019,

https://yearbook.obs.coe.int.

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2.3.2. Targeting services

Article 13 AVMSD does not provide a definition of what “targeting audiences in the

territory of a member state” are. The only helping tool available is Recital 38 AVMSD 2018

(emphasis added):

A Member State, when assessing, on a case-by-case basis, whether an on-demand

audiovisual media service established in another Member State is targeting audiences in

its territory, should refer to indicators such as advertisement or other promotions

specifically aiming at customers in its territory, the main language of the service or the

existence of content or commercial communications aiming specifically at the audience in

the Member State of reception.

Similar indicators can be found in Recital 42 of the 2010 version of the AVMSD

concerning broadcasts directed at the territory of a member state by a media service

provider established in another member state (emphasis added):

A Member State, when assessing on a case-by-case basis whether a broadcast by a media

service provider established in another Member State is wholly or mostly directed towards

its territory, may refer to indicators such as the origin of the television advertising and/or

subscription revenues, the main language of the service or the existence of programmes or

commercial communications targeted specifically at the public in the Member State where

they are received.

In both cases, the main criterion is commercial gain at the target destination. Accordingly,

the rationale of the obligation is that providers should invest back some of the income

obtained in that territory into production or into payment to a fund.

See e.g. Cole M.D., “Guiding Principles in establishing the Guidelines for Implementation of Article 13 (6)

AVMSD – Criteria for exempting certain providers from obligations concerning European Works”, pp. 17-18,

https://emr-sb.de/wp-content/uploads/2019/05/Study-AVMSD-guidelines-Art-13.pdf.

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3. National

3.1. Types of financial obligations

According to Recital 36 AVMSD 2018, financial obligations can take the form of direct

contributions to the production of, and acquisition of rights in, European works. The

member states could also impose levies payable to a fund, based on the revenues

generated by audiovisual media services that are provided in or targeted towards their

territory.

One important difference between the two types is that whereas direct investment

obligations can be recouped by exploiting the relevant economic rights, levies payable to

national funds do not provide any direct benefit in return, even if the services may benefit

from public funding provided by the beneficiaries of the levies. In that sense, levies may

have a parafiscal character,

and given that Article 13(2) introduces an exception to the

country-of-origin principle, the levy has a cross-border element.

Another important issue is that since the AVMSD is a minimum harmonisation

directive, member states remain free to require media service providers under their

jurisdiction to comply with more detailed or stricter rules, provided that such rules comply

with EU law (Article 4 AVMSD).

3.2. National transposition

Article 13(2) AVMSD leaves much room for member states to introduce financial

obligations on VOD services. And the different choices made by individual member states

regarding transposition of the AVMSD are associated with policy choices made by each

state. The first choice to be made is whether to introduce financial obligations or not.

For an in-depth discussion of tax-related issues regarding financial obligations see Buriak S. and Weber D.,

“Financial obligations on media service providers to promote European film culture - an analysis from an EU

law and international tax law perspective” (forthcoming). The authors refer to Advocate General Tizzano’s

Opinion in Joined Cases C-393/04 and C-41/05, https://eur-lex.europa.eu/legal-

content/EN/TXT/?uri=CELEX%3A62004CC0393, in particular paragraph 66: “[…] in the case of aid funded by

means of so-called parafiscal taxes, that is to say where the State aid consists in the grant, in the form of

subsidies which benefit certain persons, of resources acquired on the basis of a tax introduced specifically for

that purpose (that is to say, a parafiscal tax).

INVESTING IN EUROPEAN WORKS: THE OBLIGATIONS ON VOD PROVIDERS

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Among the member states that have chosen to introduce financial obligations, a

further choice must be made between the different types of obligations available: direct

investment (production and/or rights acquisition) or paying a levy to a support fund. Most

member states have opted to introduce direct investment obligations, as the sole option,

as an alternative to levies, or as a cumulation of both options. Only five member states

(Denmark,

Czech Republic, Germany, Ireland

and Poland) have introduced levies

without any direct investment obligation.

Moreover, the fact that Article 13(2) AVMSD allows introduction of financial

obligations also for targeting services adds another decisional layer. The obligations for

targeting services match the ones imposed on domestic services except in the case of

Croatia, where targeting services are required to make a supplementary financial

contribution to the implementation of the National Program for Promoting Audiovisual

Creativity Works on top of the direct investment obligation that both domestic and

targeting services abide by. The rules in Greece make a distinction between domestic

(direct investment only) and targeting services (choice between direct investment and

levies).

Having made the abovementioned choices, each member state must establish the

base to which the financial obligation applies, which is done according to the service’s

annual turnover. A rate (that is, a percentage) is applied to this base, and the result of this

operation will be the actual amount that the VOD service in question will have to invest

in production/rights acquisition or pay as a levy. In some countries, the rate differs

depending on the turnover: in Germany, for example, for the calculation of the levy a rate

of 1,8% is applied to services with a turnover up to EUR 20 000 000, whereas in the case

of those with a turnover over that figure a 2,5% rate will apply.

As can be observed in the following tables, the differences in rate are quite

significant, with France and Italy having introduced much higher obligations than the

other member states.

With regard to direct investment obligations – i.e. production and acquisition of

rights – the situation as per 22 September 2022 is as follows:

Table 1. Direct investment obligations – rates and bases

Countries

Rate

Base

BE DE

The government shall

specify further rules.

The revenue generated in the German-

speaking Community.

BE VL

2,0%

Turnover achieved in the Dutch-speaking

region in the second year preceding the year

of the compulsory contribution. If the on-

Not adopted at the time of writing, see the subchapter concerning Denmark below.

Not adopted at the time of writing, see the subchapter concerning Ireland below.

INVESTING IN EUROPEAN WORKS: THE OBLIGATIONS ON VOD PROVIDERS

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demand AVMS has been active for less than 12

months in the second year preceding the year

of the obligation to pay contributions, the

annual turnover in the Dutch-language area

shall be calculated by multiplying the average

monthly turnover of the second year preceding

the year of the obligation to pay contributions

by 12.

BE WA

2,2%

1,8%

1,6%

1,4%

Turnover above EUR 20 million;

Turnover between EUR 15 and 20 million;

Turnover between EUR 10 and 15 million;

Turnover between EUR 5 and 10 million;

Turnover between EUR 300 000 and 5 million;

Turnover between EUR 0 and 300,000.

4,0%

Gross revenues earned in Switzerland.

5,0%

Of annual income.

SVOD services:

25% if they offer at least

one feature film per year

within a period of less

than 12 months after its

theatrical release in France

20% in other cases (other

quotas shall apply to pay-

per-view services and free-

of-charge services: see

Article 20 of 22 June 2021

Decree).

Other VOD services:

15% of the annual

turnover which arises from

exploitation of

cinematographic works

15% of the annual

turnover which arises from

exploitation of audiovisual

works.

Catch-up TV

(cinematographic

contribution): applicable

proportions to the

television service from

which they originated.

Of their net annual turnover for the previous

financial year generated in France

1,5%

Turnover associated with AVMS operations in

Greece.

INVESTING IN EUROPEAN WORKS: THE OBLIGATIONS ON VOD PROVIDERS

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Targeting services:

turnover relating to their activity in Greece,

either:

to the production of Greek audiovisual works,

to the purchase of rights to Greek audiovisual

works (unreleased), or

to the National Centre for Audiovisual Media

and Communication

2,0%

Total annual gross revenue.

The investment may be cumulated over a

period of two years.

17,0%

Up to a percentage of their annual net

revenues in Italy.

4.5%

Annual turnover in the Netherlands of more

than EUR 30 million (DRAFT)

0,5 % or EUR 0.50 per

subscriber or EUR 10 000.

1 % or EUR 1 per

subscriber or EUR 100 000.

2 % or EUR 2 per

subscriber or EUR 500 000.

3 % or EUR 3 per

subscriber or EUR

1 500 000.

4 % or EUR 4 per

subscriber or EUR

4 000 000.

Between EUR 200 000 and EUR 1 999 999

Between EUR 2 000 000 and EUR 9 999 999

Between EUR 10 000 000 and EUR 24 999 999

Between EUR 25 000 000 and EUR 49 999 999

EUR 50 000 000 or more

40,0%

Up to 40% of the amount due to the Film

Fund.

Source: European Audiovisual Observatory

INVESTING IN EUROPEAN WORKS: THE OBLIGATIONS ON VOD PROVIDERS

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With regard to indirect investment obligations – i.e. contributions to funds – the situation

as per 22 September 2022 is as follows:

Table 2. Indirect investment (levies) – rates and bases

Countries

Rate

Base

BE VL

2,0%

Turnover achieved in the Dutch-speaking

region in the second year preceding the year

of the compulsory contribution. If the on-

demand AVMS has been active for less than 12

months in the second year preceding the year

of the obligation to pay contributions, the

annual turnover in the Dutch-language area

shall be calculated by multiplying the average

monthly turnover of the second year preceding

the year of the obligation to pay contributions

by 12.

BE WA

2,2%

1,8%

1,6%

1,4%

Turnover above EUR 20 million;

Turnover between EUR 15 and 20 million;

Turnover between EUR 10 and 15 million;

Turnover between EUR 5 and 10 million;

Turnover between EUR 300 000 and 5 million;

Turnover between EUR 0 and 300,000.

A substitute levy shall be

due if the investment

obligation is not achieved

on average over a period

of four years.

Gross revenues earned in Switzerland.

0,5%

Of the price paid by the end-user to the on-

demand AVMS for the provision of a single

service which includes the making available of

a cinematographic work or for on-demand

audiovisual media services provided otherwise

than by the making available of a single work,

irrespective of their technological nature,

including also all forms of subscription fees

where the service includes the making

available of at least one cinematographic

work.

INVESTING IN EUROPEAN WORKS: THE OBLIGATIONS ON VOD PROVIDERS

Page 29

2,5% or

1,8%

Annual turnover over EUR 20 000 000;

Annual turnover of up to EUR 20 000 000.

The turnover of the previous year shall be

used to determine which of the annual

turnover levels has been reached. If the

turnover was generated during only part of the

previous year, the annual turnover shall be

calculated by multiplying the average monthly

turnover of the previous year by the figure 12.

In the absence of turnover in the previous

year, the turnover level may be determined on

the basis of the monthly turnover in the year

of the tax.

6,0%

Annual turnover in Denmark if exceeds DKK

15 million (DRAFT)

5,0%

Of annual income.

5,15%

The net annual turnover for the previous

financial year.

1,5%

Targeting services:

turnover relating to their activity in Greece,

either:

to the production of Greek audiovisual works,

to the purchase of rights to Greek audiovisual

works (unreleased), or

to the National Centre for Audiovisual Media

and Communication

Financial contribution to

the implementation of the

National Program for

Promoting Audiovisual

Creativity Works in

accordance with the law

governing audiovisual

INVESTING IN EUROPEAN WORKS: THE OBLIGATIONS ON VOD PROVIDERS

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activity

To be defined

The method of calculation of a levy shall be

based on the revenue earned by the provider

in the State from any audiovisual media

service which it provides there.

1,5%

Of the revenue generated by the fees for

access to on-demand audiovisual media

services made available to the public or

revenue generated by the broadcast of

commercial communications, if that revenue is

higher in the relevant accounting period.

Advertisers

4,0%

SVODs

1,0%

Audiovisual commercial communication

included in on-demand audiovisual services

are subject to a fee of the price paid

Relevant income

Purchase

3,0%

Rental or SVOD

4,0%

Price of films downloaded for remuneration

Revenue from single transactions or

subscriptions

Source: European Audiovisual Observatory

The following subchapters explain which member states have introduced financial

obligations in their national legislation and how their systems function in more detail.

3.2.1. BE - Belgium

3.2.1.1. German-speaking Community

According to Art. 30 of the Decree of 1 March 2021 on Media Services and Cinema

Screenings,

on-demand AVMS provided by registered providers must promote the

The case study on the German-speaking Community of Belgium incorporates the kind feedback received

from Juergen Braumeier (Medienrat of the German speaking Community of Belgium /Medienrat der

Deutschsprachigen Gemeinschaft Belgiens) during the checking round with the competent national media

regulator within the EPRA network.

INVESTING IN EUROPEAN WORKS: THE OBLIGATIONS ON VOD PROVIDERS

Page 31

production of and access to European works. This promotion may also relate, inter alia, to

the financial contribution of such services to the production and rights acquisition of

European works or to the share and/or prominence of European works in the catalogue

offered by on-demand AVMS services the target groups of which are in the German-

speaking Community but which are established in another member state or another

community – they may also be required to make financial contributions which are

proportionate and non-discriminatory. The financial contribution must be based only on

the revenue generated in the German-speaking Community and must be in accordance

with Union law, in particular the rules on state aid.

The Government must lay down more detailed arrangements and may determine

other adequate forms of promotion.

3.2.1.2. French-speaking Community

According to Article 6.1.1-1. § 1er. of the Decree on Audiovisual Media Services and Video

Sharing Services,

every linear and on-demand AVMS, established in the French-speaking

Community or targeting its audience from abroad, must contribute to the production of

audiovisual works. This contribution must be made either in the form of co-production of

audiovisual works or pre-purchase of broadcasting rights or in the form of a payment to

the Centre du cinéma et de l'audiovisuel (CFWB).

The choice is made by the service

provider every year and, in the absence of a choice, the contribution in the form of a

payment to the CFWB applies.

The modalities of these two forms of contribution are to be set by the

government.

The government provides for the constitution of Support Committees in charge of issuing

an opinion on abidance by the contribution obligation. Each Support Committee is made

up of representatives of the AVMS, the government and professional organisations

representing independent producers in the French Community as well as audiovisual

authors and performers in the French Community.

The government provides, also under the conditions it sets, that:

◼ the AVMS may entrust, under its sole responsibility, all or part of its obligation to

a third company

◼ the financial commitments in co-production or pre-purchase made by each AVMS

in audiovisual works generate, for an equivalent amount, economic spin-offs in

Dekret über die Mediendienste und die Kinovorstellungen, http://medienrat.be/files/Mediendekret%202021-

BS-120421.pdf.

The case study on the French-speaking Community of Belgium incorporates the kind feedback received

from Anahi Vila (Conseil Supérieur de l'Audiovisuel) during the checking round with the competent national

media regulator within the EPRA network.

Dcret du 4 février 2021 relatif aux services de medias audiovisuels et aux services de partage de vidos,

http://www.ejustice.just.fgov.be/eli/decret/2021/02/04/2021020568/moniteur.

https://audiovisuel.cfwb.be/.

INVESTING IN EUROPEAN WORKS: THE OBLIGATIONS ON VOD PROVIDERS

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the French-speaking Region or in the bilingual Region of Brussels-Capital, except

in the case of derogation provided for by it.

The Support Committees referred to in the previous paragraph must submit an annual

evaluation report to the CSA.

Service providers must commit the amount of their contribution to production

projects which have been approved by the government as audiovisual works. The

government must determine the terms of this approval.

Agreements may be concluded between each service provider, the Government

and the professional organisations representing the independent producers of the French

Community as well as the audiovisual authors and performers of the French Community,

in order to direct the obligation of the service publisher towards a particular type of

audiovisual work. These agreements may also determine a contribution in the form of co-

production or pre-purchase in excess of the amounts mentioned below, or any other

additional commitment that the service publisher may be required to make.

Any co-production or pre-purchase participation made pursuant to any other legal

obligation or benefiting from any legal advantage may not be counted as part of the

contribution referred to in this Article.

The amount of the contribution must be at least:

◼ 0% of its turnover if it is between EUR 0 and EUR 300 000

◼ 1.4% of its turnover if it is between EUR 300 000 and EUR 5 million

◼ 1.6% of its turnover if it is between EUR 5 and 10 million

◼ 1.8% of its turnover if it is between EUR 10 and 15 million

◼ 2% of its turnover if it is between EUR 15 and 20 million

◼ 2.2% of its turnover if it is more than EUR 20 million

In the absence of a declaration of turnover in accordance with the procedures determined

by the government or of evidence enabling it to be determined, the AVMS contribution is

presumed to amount to EUR 3 million. This presumption can, however, be reversed, and

the television service provider remains free to rebut the presumption before the courts on

the basis of proof of its turnover. It should be noted that this provision does not prevent

the Conseil supérieur de l'audiovisuel from imposing a sanction in the event of non-

compliance with the provision.

Turnover shall mean the amount of gross receipts invoiced, without deduction of

commissions and surcharges, by the service provider's agency or, failing that, by the

service provider itself. Such gross revenues shall include gross revenues from the

The amounts may be adjusted annually on the basis of the index 01.01.2004 = 100 according to the

evolution of the ordinary consumer price index as defined by the law of 2 August 1971,

https://www.ejustice.just.fgov.be/cgi/article_body.pl?language=fr&caller=summary&pub_date=09-02-

20&numac=2009000070.

See CSA, “Analyse du dcret du 4 fvrier 2021 relatif aux services de mdias audiovisuels et aux services de

partage de vidos”, https://www.csa.be/wp-content/uploads/2021/10/Note-danalyse-du-nouveau-decret-SMA-

du-4-fevrier-2021.pdf.

INVESTING IN EUROPEAN WORKS: THE OBLIGATIONS ON VOD PROVIDERS

Page 33

insertion of advertising and sponsorship in the publisher's television services and all other

gross revenues, without any deductions, derived from the making available of the

television services by the AVMS in return for payment, including gross revenues derived

from any service distributor or third party for the provision of the television services and

gross revenues derived from the content of the programmes in those services.

Where the AVMS itself carries out the activity of service distributor, the turnover

shall include the gross receipts, without any deductions, resulting from its activity as

service distributor.

For foreign AVMS (Editeur de services télévisuels extérieur),

only the gross

revenues from the French Community market will be considered.

For television service providers under the jurisdiction of the French Community,

all gross revenues will be taken into account without distinction of markets, less, where

appropriate, revenues from a member state of the European Union which the service

provider is targeting and in which it is subject to a system of financial contributions for

the production of European works.

The AVMS must submit annually to the government and the College of

Authorisation and Control evidence enabling the amount of its gross turnover to be

determined.

3.2.1.3. Flemish-speaking Community

According to Article 157 of the Flemish Media Decree,

private on-demand AVMS must

participate in the production of Flemish audiovisual works, either in the form of a

financial contribution to the production or co-production of Flemish audiovisual works, or

in the form of an equivalent financial contribution to the Vlaams Audiovisueel Fonds

(VAF).

These provisions also apply to on-demand AVMS established in a member state of

the European Union and that offer non-linear media services that are aimed at the Dutch-

speaking region. The contribution will be spent by the VAF on Flemish high-quality

independent co-productions in series form. On-demand AVMS can acquire rights with

regard to productions realised with the financial contribution to the VAF. In case of co-

productions, they have to acquire the rights for transmission in Flanders separately.

According to Article 1.3-1. 14° of the decree, an “External television service provider” is “the provider of

linear or non-linear television services which falls within the jurisdiction of a Member State of the European

Union or a party to the Agreement on the European Economic Area or a party to the Council of Europe

Convention on Transfrontier Television and which targets the public in the French-speaking region or the

French-speaking public in the bilingual region of Brussels-Capital with a view to deriving revenue from

commercial communications or revenue from users in this market. Such a publisher is subject in particular to

the provisions of Articles 6.1.1-1, 9.2.3-2 and 9.2.3-3.”

The case study on the Flemish-speaking Community of Belgium incorporates the kind feedback received

from Dirk Peereman (Flemish Regulatory Authority for the Media/Vlaamse Regulator voor de Media).

Decreet betreffende radio-omroep en televisie,

https://www.ejustice.just.fgov.be/cgi_loi/change_lg_2.pl?language=nl&nm=2009035356&la=N

https://www.vaf.be/.

INVESTING IN EUROPEAN WORKS: THE OBLIGATIONS ON VOD PROVIDERS

Page 34

The Decision of 1 February 2019 of the Flemish Government

determines the

criteria, conditions and procedures for the participation of private on-demand AVMS in the

production of Flemish audiovisual works, including the basis, the rate or the amount and

any exemptions or reductions of the financial contribution.

The amount of the participation amounts to 2% of the turnover in the Dutch

language area of the second year preceding the year of the obligation to pay a

contribution. If the on-demand AVMS has been active for less than 12 months in the

second year preceding the year of the obligation to pay contributions, the annual turnover

in the Dutch-language area shall be calculated by multiplying the average monthly

turnover of the second year preceding the year of the obligation to pay contributions by

12.

Regarding the scope of the obligations, the Decision does not apply to on-demand

AVMS whose turnover is less than EUR 500 000.

Turnover is understood to mean the

income, exclusive of VAT, earned in the Dutch-language region from:

◼ the supply of on-demand AVMS based solely on non-linear television rights to the

end-user, including but not limited to payment by the consumer

◼ agreements with service distributors

◼ data valorisation

◼ audiovisual commercial communication

In the case of on-demand AVMS established in another member state of the European

Union and that offer their services aimed at the Dutch-speaking region, the turnover is

obtained by offering services to residents in the Dutch-speaking region.

Every on-demand AVMS must inform VAF, the Flemish Media Regulator

and the

Flemish government by registered letter before 15 February about the chosen form of

participation in the production of Flemish audiovisual works, and the amount of the

participation, or must provide the VRM with evidence to prove that the non-linear

television broadcaster does not fall within the scope of the rules of the Decree on the

basis of the exceptions mentioned above. In order to prove that the non-linear television

broadcaster does not fall within the scope of the rules in the Decree, the non-linear

television broadcaster must refer to the data from the second year preceding the year of

the obligation to pay contributions. In the absence of a registered letter or in the absence

of the documents referred to, the non-linear television broadcaster is deemed to have

opted for participation in the VAF via a flat-rate financial contribution. The lump-sum

contribution amounts to EUR 3 000 000 per year.

Besluit van de Vlaamse Regering betreffende de deelname van de particuliere niet-lineaire

televisieomroeporganisaties aan de productie van Vlaamse audiovisuele werken,

https://www.ejustice.just.fgov.be/eli/besluit/2019/02/01/2019011088/staatsblad.

Additional exemptions apply to television broadcasters (Articles 154, 155, 156) under certain circumstances;

and service distributors who are subject to other incentive schemes under 184/1 of the Flemish Media Decree.

https://www.vlaamseregulatormedia.be/.

The amount of the lump-sum contribution will be indexed annually from 1 January 2020 on the basis of the

price index as referred to in Article 2 of the Royal Decree of 24 December 1993 implementing the Act of 6

INVESTING IN EUROPEAN WORKS: THE OBLIGATIONS ON VOD PROVIDERS

Page 35

3.2.2. CH - Switzerland

The Federal Act of 1 October 2021

amending the Federal Act on Film Culture and

Production

introduced a new Chapter 3a with a.o. an obligation for companies which

offer films in Switzerland in their programming or via electronic on-demand or

subscription services to annually allocate at least 4% of their gross revenues to

independent Swiss film creation or pay a corresponding replacement fee. The obligation

also applies to companies that are based abroad and target a Swiss audience. It does not,

however, apply to the Swiss Broadcasting Corporation (SRG SSR), who is already subject

to an investment obligation in its license.

Because of a referendum the Act was

submitted to a vote of the People on 15 May 2022, in which around 58% of voters backed

the bill. The Act will therefore be effective starting 1 January 2024.

Expenditure shall only be deemed to be cash payments made to independent third

parties based or domiciled in Switzerland for the acquisition, production or co-production

of Swiss films and recognised co-productions between Switzerland and entities abroad.

Expenditures are eligible for the following:

◼ the acquisition of the exploitation rights of the rightsholders and the payment of

the remuneration due to the management companies approved for the use of

films in accordance with the Copyright Act of 9 October 1992

◼ the production of commissioned films by independent Swiss production

companies with the participation of independent filmmakers

◼ the co-production of films within the framework of a co-production agreement

with an independent Swiss production company with the participation of

independent filmmakers

Any subsidies for culture and the film industry granted by the Confederation, the cantons

or the municipalities as well as by institutions that are essentially dependent on them or

financed by public fees must be deducted from the expenses.

Gross receipts are the income which the undertaking earns from the films in

connection with its programme or film offering, in particular:

January 1989 on the safeguarding of national competitiveness (Koninklijk besluit ter uitvoering van de wet van 6

januari 1989 tot vrijwaring van 's lands concurrentievermogen),

https://www.ejustice.just.fgov.be/cgi_loi/change_lg_2.pl?language=nl&nm=1993021424&la=N.

The case study on Switzerland incorporates the kind feedback received from Matthias Bürcher (Federal

Office of Culture/Bundesamt für Kultur) in accordance with the Federal Office of Communications/Bundesamt

für Kommunikation, during the checking round with the competent national media regulator within the EPRA

network.

Loi fdrale sur la culture et la production cinmatographiques (Loi sur le cinma, LCin) Modification du 1er

octobre 2021, https://fedlex.data.admin.ch/filestore/fedlex.data.admin.ch/eli/fga/2021/2326/fr/pdf-a/fedlex-

data-admin-ch-eli-fga-2021-2326-fr-pdf-a.pdf.

Loi fédérale sur la culture et la production cinématographiques (Loi sur le cinéma, LCin),

https://www.fedlex.admin.ch/eli/cc/2002/283/fr.

https://www.bakom.admin.ch/bakom/fr/page-daccueil/medias-electroniques/informations-concernant-les-

diffuseurs-de-programmes/srg-ssr/octroi-de-concession-et-technique-srg-ssr.html.

INVESTING IN EUROPEAN WORKS: THE OBLIGATIONS ON VOD PROVIDERS

Page 36

◼ remuneration for the use or acquisition of the films offered

◼ income from advertising and sponsorship

◼ fees for the use of data

In the case of companies based abroad, only the gross revenues earned in Switzerland are

relevant.

The Federal Council shall regulate the procedure for the determination and

collection of the replacement fee and the cooperation with foreign authorities. It shall

take account of the legitimate interest of enterprises in the protection of their business

secrets.

The Federal Council may exempt undertakings from the obligation to promote

independent Swiss film production if:

◼ they do not achieve a certain minimum turnover

◼ they offer films only occasionally, or

◼ the obligation appears disproportionate or compliance with it is impossible, in

particular because of the nature of the films offered, the thematic orientation of

the offering or the limited scope of the television programme or because a third

party's programme or offering is offered without being changed.

3.2.3. CZ - Czech Republic

According to Article 27 of Act No. 496/2012 on Audiovisual Works and Support for

Cinematography,

providers of on-demand audiovisual media services must pay a levy to

the Czech Film Fund.

The amount shall be 0.5% of the price paid by the end-user to the

on-demand AVMS for the provision of a single service which includes the making

available of a cinematographic work or for on-demand audiovisual media services

provided otherwise than by the making available of a single work, irrespective of their

technological nature, including also all forms of subscription fees where the service

includes the making available of at least one cinematographic work. The on-demand

AVMS must include the levy in the price paid by the end-user for those services. The

service provider must keep all data relating to the levy obligation, in particular data on

the number of persons to whom the on-demand audiovisual media service is provided and

the amount of the price paid by them for the provision of the on-demand audiovisual

media service.

The case study on Czech Republic incorporates the kind feedback received from Kateřina Lojíková (Council

for Radio and TV Broadcasting/Rada pro rozhlasové a televizní vysílání) during the checking round with the

competent national media regulator within the EPRA network.

Zákon č. 496/2012 Sb. Zákon o audiovizuálních dílech a podpoře kinematografie a o změně některých zákonů

(zákon o audiovizi), https://www.zakonyprolidi.cz/cs/2012-496.

https://filmcommission.cz/en/about/czech-film-fund/.

INVESTING IN EUROPEAN WORKS: THE OBLIGATIONS ON VOD PROVIDERS

Page 37

3.2.4. DE - Germany

According to Article 153 of the Film Funding Act (FFG),

on-demand AVMS with a

registered office or branch in Germany that exploit cinematographic works produced for

commercial purposes by means of paid or advertising-financed video-on-demand services

must pay a film levy to the German Federal Film Board (Filmförderungsanstalt - FFA) on the

net turnover generated in Germany from the exploitation of cinematographic works if this

exceeds EUR 500 000 per year.

The obligation also applies to on-demand AVMS

providing offerings of German-language video-on-demand services in relation to turnover

generated in Germany. However, the levy obligation does not apply if the corresponding

sales at the place of the company's registered office are used to make a comparable

financial contribution to the promotion of cinematographic works by a film promotion

institution.

The film levy amounts to:

◼ 1.8 % for annual turnover of up to EUR 20 million

◼ 2.5 % in the case of annual turnover of more than EUR 20 million

The turnover limits are determined by the turnover of the previous year.. If the turnover

was only achieved during part of the previous year, annual turnover is calculated by

multiplying the average monthly turnover of the previous year by the number 12. If

turnover figures for the previous year are not available, the turnover limits may be

calculated on the basis of the monthly turnover in the year of delivery. In the case of

video-on-demand services for a flat fee, the net turnover subject to the levy must

correspond to the cinema film share of the total net turnover from subscription contracts

with end-consumers in Germany. The cinema film share corresponds to the share of

cinema films of actual viewing time across total offerings in Germany.

On-demand AVMS must provide the FFA with the information required for the

implementation of the FFG and submit relevant documents (Article 164 FFG). This also

applies a.o. to persons who are not required to pay a film levy solely because the turnover

limits have not been reached, as well as for persons in respect of whom the existence of

the other conditions for a duty to pay can only be ascertained if appropriate information is

provided.

The case study on Germany incorporates the kind feedback received from Peter Matzneller (Directors

Conference of the Media Authorities/Direktorenkonferenz der Landesmedienanstalten) during the checking

round with the competent national media regulator within the EPRA network.

Gesetz über Maßnahmen zur Förderung des deutschen Films (Filmförderungsgesetz - FFG),

https://www.gesetze-im-internet.de/ffg_2017/BJNR341300016.html.

See also chapter 5 of this publication.

See Chapter 12 FFG for more information on obligations to provide information and use of data.

INVESTING IN EUROPEAN WORKS: THE OBLIGATIONS ON VOD PROVIDERS

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3.2.5. DK - Denmark

In Denmark, there is a tradition of concluding multi-year political agreements on the

framework for media policy.

These agreements are concluded between the government

and one or more parties in the Danish Parliament (Folketing). The latest media policy

agreement was concluded on 29 June 2018 between the government (the Left Party, the

Liberal Alliance and the Conservative People's Party) and the Danish People's Party, and

covers the period 2019-2023.

It provides that on-demand AVMS are required to invest

2% of their turnover in Denmark in the form of direct investment in new Danish-language

content. The obligation applies to all on-demand AVMS on the Danish market, including

foreign services targeting Denmark. A threshold is set so that companies with a turnover

of less than DKK 375 000 in Denmark are exempt from the obligation. The details of the

scheme and its implementation were to be agreed in autumn 2018 between the political

parties behind the Media Agreement 2019-2023. However, it was never implemented.

There is a report from Deloitte

from November 2019 (updated in August 2020) with a

mapping of the Danish streaming market and proposals for the implementation of a

possible streaming obligation.

In its proposal of February 2022 regarding a new Media Agreement,

the Danish

Ministry of Culture proposed to introduce a cultural contribution for streaming services of

5% of the services' turnover in Denmark, to be used for the production of Danish quality

content. The contribution would go to a larger public service pool and increase subsidies

for Danish films. The scheme is designed as a tiered model. Streaming services that invest

heavily in productions with Danish content will pay a smaller cultural contribution than

services that do not.

On 15 August 2022, the Danish Ministry of Culture published a bill for a Danish

Act on Cultural Contribution for consultation with a deadline of 12 September 2022 to

submit responses.

If adopted, it will introduce an obligation for on-demand media

service providers (including targeting services) whose annual turnover exceeds DKK 15

million to pay a cultural contribution to promote Danish-language content, including the

production of Danish-language films, fiction series and documentaries. This annual

contribution will amount to 6% of their turnover in Denmark subject to the contribution.

https://kum.dk/kulturomraader/medier/medieaftaler.

Medieaftale for 2019 – 2023, https://kum.dk/fileadmin/_kum/2_Kulturomraader/Medier/medieaftaler/2019-

2023/Medieaftale_2019-2023.pdf.

Deloitte, “Forpligtelse for streamingtjenester - Forslag til udmøntning af en forpligtelse for

streamingtjenester til at bidrage til dansk indholdsproduktion”, report updated in August 2020,

https://kum.dk/fileadmin/_kum/1_Nyheder_og_presse/2020/Forpligtelse_for_streamingtjenester._August_2020.

pdf.

See Gennemførelse af Medieaftale 2019-2023 – status, 3 March 2020,

https://www.ft.dk/samling/20191/almdel/kuu/spm/134/svar/1642541/2163333.pdf.

Kulturministeriet, Udspil til ny medieaftale - Den demokratiske samtale skal styrkes- Demokratisk kontrol med

tech-giganter, mere dansk indhold og stærkere lokale og regionale medier, February 2022,

https://kum.dk/fileadmin/_kum/1_Nyheder_og_presse/2022/Medieudspil_0302_.pdf.

Forslag til Lov om visse medietjenesteudbyderes bidrag til fremme af dansksproget indhold,

(Kulturbidragsloven), https://hoeringsportalen.dk/Hearing/Details/66689.

INVESTING IN EUROPEAN WORKS: THE OBLIGATIONS ON VOD PROVIDERS

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The Agency for Culture and Palaces shall collect the contribution annually in arrears on

the basis of the media service providers' statements of turnover in Denmark for the

previous financial year. The Minister of Culture may, after consultation with the Minister

of Taxation, lay down detailed rules on the collection of the contribution, including rules

on the reminder procedure for payment, on interest and on the time limit for payment.

The proceeds of the cultural contribution shall be distributed, after deduction of the costs

associated with the administration of the scheme, with 50 per cent for a public service

pool and 50 per cent for the support of Danish-language film.

The cultural contribution scheme does not apply to on-demand audiovisual media

services from DR, the regional TV 2 enterprises, or TV 2 DANMARK A/S, as they are

provided as a part of public service activities in accordance with the rules in Chapters 4, 6,

and 6a of the Broadcasting Act.

The Act is foreseen to enter into force on 1 January 2023.

However, a national election is scheduled to be held on 1 November 2022

and, as such,

it is uncertain whether the bill may be passed.

3.2.6. ES - Spain

The revised General Audiovisual Act

introduces a financial contribution obligation

applicable to both domestic and targeting services. Its Article 117 provides that the

obligation may be fulfilled through direct participation in the production of the works,

through the acquisition of the exploitation rights thereof and/or by contributing to the

Fondo de Proteccin a la Cinematografía (Film Protection Fund), which is managed by the

Instituto de la Cinematografía y de las Artes Audiovisuales, or by contributing to the Fondo de

fomento de la cinematografía y el audiovisual en lenguas cooficiales distintas al castellano

(Fund for the promotion of cinematography and audiovisual works in co-official languages

other than Spanish).

The amount of the obligatory advance financing of European audiovisual works is

determined on the basis of the revenue accrued in the previous financial year, according

to their operating accounts, for the provision of television audiovisual media services in

the Spanish audiovisual market.

In co-productions, the contribution of the independent producer is not taken into

account for the purposes of compliance with the financing obligation.

Lov om radio- og fjernsynsvirksomhed m.v. (consolidated version), https://www.elov.dk/radio-og-

fjernsynsloven/.

https://www.thedanishparliament.dk/en/news/2022/general-election-2022.

See Foged T., “[DK] Draft bill for a Danish Act on Cultural Contribution with 6% revenue payment from VOD

services”, IRIS 2022-08, https://merlin.obs.coe.int/article/9571.

The case study on Spain incorporates the kind feedback received from Jorge Clavería Palacian (Spanish

National Markets and Competition Commission/Comisión Nacional de los Mercados y la Competencia) during the

checking round with the competent national media regulator within the EPRA network.

Ley 13/2022, de 7 de julio, General de Comunicación Audiovisual, https://www.boe.es/buscar/act.php?id=BOE-

A-2022-11311.

https://www.culturaydeporte.gob.es/cultura/areas/cine/inicio.html.

INVESTING IN EUROPEAN WORKS: THE OBLIGATIONS ON VOD PROVIDERS

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The production or purchase of film rights that are eligible for an X-rating (violent

or pornographic) is not counted for the purposes of compliance with the obligation of

advance financing of European audiovisual works.

The financial contribution obligation mentioned above shall not apply to providers

with a low turnover, to audiovisual media services with a low audience or in those cases

in which the obligation is impracticable or unjustified due to the nature or subject matter

of the audiovisual media service, under the terms to be determined by regulation.

Providers whose VOD services only have local reach and are not part of a larger national

network are exempted from the obligation.

According to Article 119, the obligation to pre-finance European audiovisual works

shall be modulated in accordance with the Commission Recommendation of 6 May 2003

concerning the definition of micro, small and medium-sized enterprises.

On-demand

AVMS, whose eligible revenue is equal to or greater than EU 50 million, must earmark 5%

of this revenue each year for the financing of European audiovisual works, the purchase of

exploitation rights for European audiovisual works already completed and/or the

contribution to the Film Protection Fund or the Fund for the promotion of cinematography

and audiovisual works in co-official languages other than Spanish. The total of the

provider's financing obligation must meet the following two conditions:

◼ At least 70% must be allocated to audiovisual works by independent producers,

produced on their own initiative or on commission, in the official language of the

Spanish State or in one of the official languages of the Autonomous Communities.

Of this sub-quota, the provider of the television audiovisual communication

service, whether linear or on demand, shall in any case set aside:

o A minimum of 15% to audiovisual works in the official languages of the

Autonomous Communities, taking into account their population weight

and reserving at least ten percent for each of them.

o A minimum of 30% for audiovisual works directed or created exclusively

by women.

◼ At least 40% must be allocated to cinematographic films by independent

producers, produced on their own initiative or on commission, of any genre in the

official language of the Spanish State or in one of the official languages of the

Autonomous Communities.

Providers whose income is less than EUR 50 million and greater than or equal to EUR 10

million, must allocate 5% percent of this income annually to the financing of European

audiovisual works, to the purchase of exploitation rights for finished European

audiovisual works or to the contribution to the Fund for the Protection of

Cinematography. Out of the total of the provider's obligatory financing, a minimum of

70% must be earmarked for audiovisual works by independent producers, produced on

their own initiative or on commission, in the official language of the Spanish State or in

one of the official languages of the Autonomous Communities.

See Chapter 2 of this publication.

INVESTING IN EUROPEAN WORKS: THE OBLIGATIONS ON VOD PROVIDERS

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Providers whose computable revenue, in accordance with the provisions of Article

117.3, is less than EUR 10 million are exempt from the obligation.

3.2.7. FR - France

According to Article 10 of the non-linear AVMS Decree,

the obligation to contribute to

the development of cinematographic and audiovisual works is applicable to on-demand

audiovisual media services, including those not established in France and not falling

within the jurisdiction of France within the meaning of Article 43-2 of the Act of 30

September 1986 (Léotard Act),

but aimed at French territory, which meet the following

conditions:

◼ Services allowing the viewing, for a limited period of time, of programmes

broadcast on a television service (catch-up TV) ; the non-linear AVMS decree is

only applicable regarding the cinematographic contribution for those services;

◼ Other on-demand audiovisual media services if they have an annual net turnover

of more than EUR 5 million and if their audience is greater than 0.5% of the total

audience in France of the category of on-demand audiovisual media services to

which they belong

For the purposes of assessing audience share, a distinction must be made among the on-

demand audiovisual media services referred to in 2° between the following categories:

subscription video-on-demand services (SVOD), transactional video-on-demand services

(TVOD) and other services.

Article 11 provides exclusions for:

◼ services which offer less than 10 feature films per year

◼ catch-up television services established in France (for the audiovisual contribution

only)

◼ other on-demand services whose offering is mainly devoted to works of a

pornographic nature, or inciting to violence, or which offer fewer than 10

audiovisual works per year other than those aforementioned.

SVOD services must devote at least 20% of the net annual turnover they generate in

France to the funding of European or French cinematographic and audiovisual production.

The proportion increases to 25% for services that offer at least one film less than 12

The case study on France incorporates the kind feedback received from Raphaël Honoré (Regulatory

Authority for Audiovisual and Digital Communication/Autorité de régulation de la communication audiovisuelle

et numérique) during the checking round with the competent national media regulator within the EPRA

network.

Décret n° 2021-793 du 22 juin 2021 relatif aux services de médias audiovisuels à la demande,

https://www.legifrance.gouv.fr/jorf/id/JORFTEXT000043688681.

Loi n° 86-1067 du 30 septembre 1986 relative à la liberté de communication (Loi Léotard),

https://www.legifrance.gouv.fr/loda/id/LEGITEXT000006068930/.

INVESTING IN EUROPEAN WORKS: THE OBLIGATIONS ON VOD PROVIDERS

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months after its release in France. The ratio between cinematographic and audiovisual

works is being laid down in an agreement

to be concluded with the Autorité de régulation

de la communication audiovisuelle et numérique (the French audiovisual regulator –

Arcom)

. Each category cannot represent less than 20% of the total contribution.

Other on-demand services must devote at least 15% of the net annual turnover to

the funding of European production, of which at least 12% to original French language

productions.

For catch-up television services, the proportions of the cinematographic

contribution are identical to those applicable to the television service from which they

originate.

A significant portion of this contribution (three quarters for film production, two

thirds for audiovisual production) will support independent production of European works,

which is defined according to criteria aimed at guaranteeing the preservation and

development of local intangible heritage in France and the distribution of works. To be

considered independent production in France, service provider may not have any direct or

indirect financial interests in production companies and the rights must not exceed a

certain duration particularly where they have been acquired on an exclusive basis, while

coproduction shares, income rights, distribution mandates and secondary rights are not

permitted. Clauses must also be included to determine specific obligations in independent

production regarding audiovisual genres which are significant in the service offer. Finally,

diversity clauses for subscription services only must also be included in order to prevent

the contribution being focused on big-budget films or certain genres (e.g. fiction or

animation).

Chapter III of the decree requires at least 60% of the works in non-linear AVMS

catalogues to be European, and at least 40% of these to be original French language

productions. It also contains rules on promoting these works via visuals, trailers and

specific sections on the homepage, and on recommending content to users through

programme searches or promotional campaigns. Such conditions will be clarified in the

agreement with Arcom at the same time as the reference period to calculate the

obligations.

A 5.15% levy on the yearly turnover (increased to 15% when the transaction

concerns pornographic or violent works) is payable for making available services to the

French public which give them access to cinematographic or audiovisual works, upon

individual request, and by means of an electronic communication process, whether or not

the VOD provider is established in France.

French-based service providers with a net annual turnover greater than EUR 1 million are required to sign

such an agreement, which should particularly set out their contribution obligations as well as their duty to

offer and showcase these works and to provide rightsholders with access to exploitation data concerning their

works. Those that fall outside French jurisdiction but aiming at French territory can choose whether or not to

sign such an agreement.

https://www.arcom.fr/.

Code général des impôts, Article 1609 sexdecies B,

https://www.legifrance.gouv.fr/codes/article_lc/LEGIARTI000041472728/.

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3.2.8. GR - Greece

100

According to Article 8(6) of Act 3905/2010 on support for, and development of, the art of

cinema,

101

telecommunication services and new technology companies are obliged to

allocate each year 1.5% of their annual turnover resulting from the provision of

audiovisual media services via Internet or mobile telephony (IPTV, VOD) to the production

of Greek cinematographic works. These are defined as cinematographic works that fulfil a

number of artistic and technical criteria (Article 4 of Act 3905/2010) and two of the

following three criteria (Article 3 of Act 3905/2010):

◼ the original version must be at least 51% in the Greek language

◼ at least 51% of the filming must have taken place in the Greek territory

◼ at least 51% of the budgetary costs must have been demonstrably spent in the

Greek territory

With regard to targeting services, according to Article 17(2) of Act 4779/2021,

102

providers

of on-demand media services established in another member state, if they are specifically

addressed to the public in Greece, must contribute financially each year an amount equal

to 1.5% of their turnover relating to their activity in Greece, either:

◼ to the production of Greek audiovisual works, or

◼ to the purchase of rights to Greek audiovisual works that have not yet been

released, or

◼ to a special account of the National Centre for Audiovisual Media and

Communication A. E. (E.K.O.M.E.), established by Law No. 4339/2015

103

for the

support of Greek producers.

These providers are considered to be specifically addressed to the Greek audience, in

particular if they advertise to it, if the main language of their service is Greek, even with

subtitles, and if the services provided contain programmes or commercial

communications addressed to the Greek audience or specifically related to it. The concept

of a Greek audiovisual work includes “autonomous” audiovisual works, as referred to in

Article 20(2) of Act No. 4487/2017.

104

For the characterization of an audiovisual work as

Greek, the provisions of paragraphs. 1, 2 and 3 of Article 3 of Act 3905/2010 apply.

100

The case study on Greece incorporates the kind feedback received from Persa Lampropoulou (National

Council for Radio and Television/Εθνικό Συμβούλιο Ραδιοτηλεόρασης) during the checking round with the

competent national media regulator within the EPRA network.

101

ΝΟΜΟΣ ΥΠ' ΑΡΙΘΜ. 3905 ΦΕΚ Α΄ 219/23.12.2010,

https://www.kodiko.gr/nomothesia/document/129347/nomos-3905-2010.

102

ΝΟΜΟΣ ΥΠ’ ΑΡΙΘΜ. 4779 ΦΕΚ Α 27/20.2.2021,

https://www.kodiko.gr/nomothesia/document/672722/nomos-4779-2021.

103

ΝΟΜΟΣ ΥΠ’ ΑΡΙΘ.4339 ΦΕΚ Α 133/29.10.2015,

https://www.kodiko.gr/nomothesia/document/127264/nomos-4339-2015.

104

ΝΟΜΟΣ ΥΠ’ ΑΡΙΘΜ. 4487ΦΕΚ Α΄ 116/09.08.2017,

https://www.kodiko.gr/nomothesia/document/275774/nomos-4487-2017, Article 20(2): “an autonomous

audiovisual work: an episode or parts of episodes or a season of episodes of a mini television series, a

television or a cinematographic film or a part thereof, irrespective of its duration, a digital game. The content

INVESTING IN EUROPEAN WORKS: THE OBLIGATIONS ON VOD PROVIDERS

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Article 51(3) of Law 4779/2021 provides for Ministerial Decisions that will

complement the provisions of Article 17, although at the time of writing these lines

(September 2022), these decisions had not yet been issued.

3.2.9. HR - Croatia

105

According to Article 27(2) of the new Electronic Media Act,

106

providers of on-demand

AVMS are obliged to invest 2% of the total annual gross income in the production of

Croatian audiovisual works by independent producers or to purchase produced Croatian

audiovisual works by independent producers.

According to Article 28 of the new Electronic Media Act, on-demand AVMS

targeting Croatia, including services established in other EU member states, are required

to:

◼ make a financial contribution to the implementation of the National Program for

Promoting Audiovisual Creativity Works in accordance with the law governing

audiovisual activity

◼ invest 2% of total annual gross income in the production of Croatian audiovisual

works by independent producers, or purchase produced Croatian audiovisual

works by independent producers; this investment may be cumulated over two

years

These obligations relate to revenues generated by the media service provider by

performing activities in the Republic of Croatia. Data on advertising and subscription

revenues should be provided by media service providers on request in the form of

financial statements certified by independent audit firms. For on-demand media service

providers established in the Republic of Croatia, which are aimed at audiences in other EU

member states that have introduced a financial contribution, the amount of the paid

contribution in other countries is considered in the calculation.

of the above may be fiction, creative documentary (documentary), animation, as well as a digital game,

cultural or educational. The aforementioned self-contained audiovisual works are produced for the user

experience in linear or non-linear format, with or without interactive applications and with the possibility of

being distributed on multiple platforms, such as free-to-air terrestrial television, pay-TV, IPTV, on-demand

services, cinema screens, websites for the distribution and display of TV and film works, social media, in

whole or as part of applications and programmes for computers, tablets, PCs, PCs, mobile phones, mobile

phones and other devices.”

105

The case study on Croatia incorporates the kind feedback received from Sanja Pančić (Agency for Electronic

Media of the Republic of Croatia/Agencija za elektronicke medije) during the checking round with the

competent national media regulator within the EPRA network.

106

Zakon o elektroničkim medijima, NN 111/21,

https://narodne-novine.nn.hr/clanci/sluzbeni/2021_10_111_1942.html.

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3.2.10. IE - Ireland

At the time of writing (September 2022), Ireland had not yet transposed the revised

AVMSD. The Online Safety and Media Regulation Bill 2022

107

will a.o. amend the

Broadcasting Act 2009,

108

in order to provide for the establishment of a new regulator and

a multi-person Commission (Coimisin na Meán), to dissolve the existing regulator, the

Broadcasting Authority of Ireland,

109

and to provide for the implementation of the revised

AVMSD.

110

A new Part 10A of the Broadcasting Act 2009 will provide for the imposition of a

European works levy and making of a European works scheme out of which funds from

the levy may be granted by the Coimisin na Meán.

Section 159E of the Broadcasting Act 2009 will provide that the Coimisin na Meán

may impose a levy (the “European works levy”) on media service providers under the

jurisdiction of Ireland, or those under the jurisdiction of another member state, and

targeting audiences in Ireland. Service with low audiences or turnover will be exempted,

and the rules will not apply in cases where the Coimisin na Meán will consider it

impracticable or unjustified by reason of the nature of a service to impose the

corresponding obligations on it. A levy order may provide for the collection, payment and

administration of a levy, including:

◼ the method of calculation of the levy

◼ the period in respect of which the levy is imposed

◼ the times at which payment is to be made and the form of payment

◼ the records which a provider must keep and make available to the Commission

◼ exemptions from the levy, deferrals of payment of the levy or refunds of the levy

◼ the consideration of applications by providers for review of decisions under the

order

In the case of a media service provider that is under the jurisdiction of Ireland and targets

audiences in another member state, the method of calculation of a levy must take into

account any financial contribution imposed on the provider by that member state.

In the case of a media service provider which targets audiences in Ireland and is

established in another member state, the method of calculation of a levy shall be based

on the revenue earned by the provider in the state from any audiovisual media service

which it provides there, and the levy shall be proportionate and non-discriminatory.

According to Section 159F, the Coimisin na Meán may create a scheme (the

“European works scheme”) out of which funds from the European works levy may be

107

Online Safety and Media Regulation Bill 2022,

https://data.oireachtas.ie/ie/oireachtas/bill/2022/6/eng/initiated/b0622s.pdf.

108

Broadcasting Act 2009, https://www.irishstatutebook.ie/eli/2009/act/18/enacted/en/html.

109

https://www.bai.ie/.

110

See Explanatory and Financial Memorandum of the Online Safety and Media Regulation Bill 2022,

https://data.oireachtas.ie/ie/oireachtas/bill/2022/6/eng/memo/b0622s-memo.pdf.

INVESTING IN EUROPEAN WORKS: THE OBLIGATIONS ON VOD PROVIDERS

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granted to provide support for the production of European works to media service

providers which are under the jurisdiction of Ireland, or target audiences in Ireland and

are established in another member state. The section specifies the type of programming

that may be supported, which includes programmes relating to Irish culture, history,

heritage, society and sport, or new audiovisual programmes to improve adult literacy or

improve media literacy. The section also provides that at least 25% of the annual funds

under this scheme be granted to certain programmes in the Irish language.

3.2.11. IT - Italy

111

Article 55 of the recently adopted Decreto Legislativo

112

provides that on-demand

audiovisual media service providers under Italian jurisdiction must comply with an

obligation to invest in European audiovisual works produced by independent producers to

an extent equal to a percentage share of their annual net revenues in Italy, as provided

for by a forthcoming Agcom regulation, defined as follows:

◼ 17% until 31 December 2022

◼ 18% from 1 January 2023

◼ 20% from 1 January 2024

These investment obligations apply also to providers of on-demand audiovisual media

services having editorial responsibility for offerings addressed to consumers in Italy, even

if they operate in another member state.

A share of not less than 50% of the abovementioned percentages provided for

European works is reserved for original Italian works produced in the last five years by

independent producers. The regulation(s) referred to in article 57 of the Decreto Legislativo

will provide that a percentage equal to at least 20% of this sub-investment quota is

reserved for cinematographic works of Italian origin, produced anywhere within the last

five years by independent producers.

A regulation issued by Agcom will set threshold criteria regarding media service

providers with a low turnover or audience. Derogation from these requirements will also

apply in cases where compliance is impracticable or unjustified due to the nature or

subject matter of the audiovisual media services. This regulation will also provide for the

111

The case study on Italy incorporates the kind feedback received from Francesca Pellicanò (Italian

Communications Authority/Autorità per le garanzie nelle communicazioni) during the checking round with the

competent national media regulator within the EPRA network.

112

Decreto Legislativo 8 novembre 2021, n. 208 Attuazione della direttiva (UE) 2018/1808 del Parlamento europeo

e del Consiglio, del 14 novembre 2018, recante modifica della direttiva 2010/13/UE, relativa al coordinamento di

determinate disposizioni legislative, regolamentari e amministrative degli Stati membri, concernente il testo unico

per la fornitura di servizi di media audiovisivi in considerazione dell'evoluzione delle realta' del mercato,

https://www.gazzettaufficiale.it/atto/serie_generale/caricaDettaglioAtto/originario?atto.dataPubblicazioneGaz

zetta=2021-12-10&atto.codiceRedazionale=21G00231&elenco30giorni=true

INVESTING IN EUROPEAN WORKS: THE OBLIGATIONS ON VOD PROVIDERS

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means by which the audiovisual media service provider will define the quantification of

the obligations with regard to European works produced by independent producers.

Audiovisual media service providers that generate at least 80% of their annual net

revenues from linear broadcasting and that also provide on-demand media services will

have to abide by the provisions of Articles 53 and 54 of the Decreto Legislativo concerning

investment obligations for broadcasters, and not those of Article 55.

According to Article 67(2)(d) of the Decreto Legislativo, failure to comply with the

rules on the protection of European and independent audiovisual production may be

sanctioned with a fine from EUR 100 000 to EUR 5 000 000, or up to 1% of annual

turnover, when the value of such a percentage is higher than EUR 5,000,000. If the

infringement is particularly serious or repeated the Authority may order the service

provider to suspend activity for a period not exceeding six months, or in the most serious

cases of non-compliance with the orders and warnings of the same Authority, the

revocation of the concession or of the authorisation (Article 67(11) of the Decreto

Legislativo).

3.2.12. NL – Netherlands

On 18 July 2022, the State Secretary for Culture and Media (Staatssecretaris Cultuur en

Media) introduced a new Bill to the Lower House of Parliament (Tweede Kamer), which

will amend the Media Act (Mediawet) 2008.

113

The bill requires streaming services with an

annual turnover in the Netherlands of more than EUR 30 million to invest 4.5% of their

turnover in Dutch films, series and documentaries. That investment includes, for example,

(co)producing a Dutch title themselves, or buying and offering an existing, recent Dutch

production. Part of the investment should benefit independent producers to ensure a

diverse supply.

114

113

Voorstel van wet tot wijziging van de Mediawet 2008 in verband met het invoeren van een

investeringsverplichting ten behoeve van Nederlands cultureel audiovisueel product, 15 juli 2022,

https://www.rijksoverheid.nl/regering/bewindspersonen/gunay-

uslu/documenten/kamerstukken/2022/07/15/wetsvoorstel-wijziging-mediawet-2008.

114

See press release of the Dutch State Secretary for Culture and Media, “Grote streamingdiensten moeten

meer investeren in Nederlandse producties”, 18 juli 2022,

https://www.rijksoverheid.nl/regering/bewindspersonen/gunay-uslu/nieuws/2022/07/18/grote-

streamingdiensten-moeten-meer-investeren-in-nederlandse-producties. See also Ó Fathaigh R., “[NL] New bill

requiring major streaming platforms to invest in Dutch productions”, IRIS 2022-8:1/16,

https://merlin.obs.coe.int/article/9566.

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3.2.13. PL - Poland

115

According to Article 19(6a) of the Cinematography Act,

116

on-demand audiovisual media

services under Polish jurisdiction must make a payment to the Polish Film Institute

(PISF)

117

equal to 1.5% of the revenue derived from fees for access to on-demand

audiovisual media services made available to the public or of the revenue derived from

the broadcasting of commercial communications if that revenue is greater in the relevant

accounting period. Services which have their registered office in another member state of

the European Union are subject to the same obligation, which will be determined based

on the revenue generated on the territory of the Republic of Poland (Article 19(6b) of the

Cinematography Act).

This obligation does not apply to service providers

118

◼ that are a micro-entrepreneur within the meaning of Art. 7 (1) (1) of the

Entrepreneurs Act

119

◼ whose number of users of all audiovisual media services on demand in the year

preceding the year in which the obligation to pay the contribution to the Institute

is established, did not exceed 1% of the subscribers of data transmission services

providing broadband access to the Internet; the number of users of data

transmission services providing broadband access to the Internet shall be

determined on the basis of data from the inventory referred to in Article 29 of the

Act on supporting the development of telecommunications services and

networks.

120

3.2.14. PT - Portugal

121

The Film Act

122

imposes three different financial obligations on VOD providers (including

foreign providers targeting Portugal) in the form of two levies for the film fund ICA

123

and

115

The case study on Poland incorporates the kind feedback received from Małgorzata Pek (Polish

Broadcasting Council/Krajowa Rada Radiofonii I Telewizji) during the checking round with the competent

national media regulator within the EPRA network.

116

Ustawa z dnia 30 czerwca 2005 r. o kinematografii (t.j. Dz. U. z 2021 r. poz. 257 z pźn. zm.),

https://isap.sejm.gov.pl/isap.nsf/download.xsp/WDU20051321111/U/D20051111Lj.pdf.

117

https://pisf.pl/.

118

Ibidem, art. 19(6c).

119

Ustawa z dnia 6 marca 2018 r. - Prawo przedsiębiorcw, (t.j. Dz. U. z 2021 r. poz. 162 z pźn. zm.),

https://isap.sejm.gov.pl/isap.nsf/DocDetails.xsp?id=WDU20180000646.

120

Ustawa z dnia 7 maja 2010 r. o wspieraniu rozwoju usług i sieci telekomunikacyjnych, (t.j. Dz. U. z 2022 r. poz.

884),

https://isap.sejm.gov.pl/isap.nsf/DocDetails.xsp?id=WDU20101060675.

121

The case study on Portugal incorporates the kind feedback received from Joana Duarte (Portuguese

Regulatory Authority for the Media/Entidade reguladora para a communicação social) during the checking

round with the competent national media regulator within the EPRA network.

122

Lei n.º 55/2012, https://dre.pt/dre/legislacao-consolidada/lei/2012-74931963.

123

https://www.ica-ip.pt/.

INVESTING IN EUROPEAN WORKS: THE OBLIGATIONS ON VOD PROVIDERS

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direct investment obligations. According to Article 45(4) of the Television Act 27/2007

124

these obligations are applicable to on-demand audiovisual service operators that are

under the jurisdiction of another member state but target audiences located in

Portuguese territory, in relation to the revenues they obtain in Portugal.

According to Article 14a of the Film Act, operators of on-demand AVMS are

required to allocate a portion of their investment expenses to the development,

production and promotion of European and Portuguese language works and works of

independent production. This obligation is not applicable to on-demand AVMS with a low

turnover or low audience in the national market, under the following terms:

◼ Annual revenues in the national market of less than EUR 200 000

◼ Services with a share in the respective market segment of less than 1%

The amounts to be invested are as follows:

125

◼ Less than EUR 200 000: exempted

◼ Between EUR 200 000 and EUR 1 999 999: 0,5 % of the relevant income or EUR

0.50 per subscriber or a flat rate of EUR 10 000.

◼ Between EUR 2 000 000 and EUR 9 999 999: 1 % of the relevant income or EUR 1

per subscriber or a flat rate of EUR 100 000.

◼ Between EUR 10 000 000 and EUR 24 999 999: 2 % of the relevant income or EUR

2 per subscriber or a flat rate of EUR 500 000

◼ Between EUR 25 000 000 and EUR 49 999 999: 3 % of the relevant income or EUR

3 per subscriber or a flat rate of EUR 1 500 000

◼ EUR 50 000 000 or more: 4 % of the relevant income or EUR 4 per subscriber or a

flat rate of EUR 4 000 000

Relevant income is deemed to be that resulting from the following services provided in

the year prior to the year of the obligation:

◼ audiovisual commercial communications

◼ subscriptions or one-off transactions

The obligations apply to on-demand AVMS under the jurisdiction of another member

state, whenever these operators target audiences or make commercial offers to the public

in the national territory and apply only to income made in the national market.

The obligations apply only to those that include in the programming of any of

their programme services or in their catalogues feature films, short films, telefilms,

creative or creative documentaries for television, and series, including fiction,

documentary and animation, and do not apply to those whose programme services or

catalogues include only works of a pornographic nature. In the case of generalist

programme services or where the relevant types of content constitute less than 50% of

124

Lei n.º 27/2007, https://dre.pt/dre/legislacao-consolidada/lei/2007-34561375.

125

See Annex to the Film Act: https://files.dre.pt/1s/2020/11/22600/0000400034.pdf.

INVESTING IN EUROPEAN WORKS: THE OBLIGATIONS ON VOD PROVIDERS

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the respective programming, measured in number of hours, the investment values are

reduced by 50%.

The decree-law that regulates the Film Act specifies procedures and mechanisms

to promote the diversification of partners and the non-concentration of investments, as

well as to ensure the application of copyright rules that contribute to the sustainability

and development of the independent creative and entrepreneurial fabric.

126

According to Article 16 of the Film Act, investment of on-demand AVMS in the

production of European cinematographic and audiovisual creative works of independent

production, originally in Portuguese, may take the following forms:

◼ Financing of writing and project development work for European cinematographic

and audiovisual creative works of independent production, originally in the

Portuguese language, the Portuguese language requirement not applying in the

case of co-productions with national participation under the applicable treaties, of

any of the types referred to in Article 14a(8)(a).

◼ Participation in the financing of the production of cinematographic and

audiovisual creative works of European independent production, originally in

Portuguese, the Portuguese language requirement not applying in the case of co-

productions with national participation under the applicable treaties, of any of the

types referred to in point a) of no. 8 of Article 14.A, through:

o i) Acquisition of exploitation rights in the project phase

o ii) Co-production

o iii) Association with production, without co-ownership

◼ Acquisition of exploitation rights of cinematographic and audiovisual creative

works of European independent production, originally in Portuguese, the

Portuguese language requirement not applying in the case of co-productions with

national participation under the applicable treaties.

◼ Restoration and mastering of films, and of supported works and other European

works in Portuguese, provided that two copies in accordance with the technical

standards defined by this entity are delivered to the Cinemateca, I. P.

◼ Promotion of European cinematographic and audiovisual works.

◼ In-house production or production by associated companies, the acquisition of

commissioned works or investment in other European creative works.

At least 30% of the compulsory investment is carried out in financing of writing and

project development work and participation in the financing of production.

In the case of SVOD services, the works in the last bullet point (in-house

production or production by associated companies, the acquisition of commissioned works

or investment in other European creative works) must be works originally in Portuguese,

and the Portuguese language requirement does not apply in the case of co-productions

with national participation under the applicable treaties.

126

Decreto-Lei n.º 74/2021, https://dre.pt/dre/detalhe/decreto-lei/74-2021-170175411.

INVESTING IN EUROPEAN WORKS: THE OBLIGATIONS ON VOD PROVIDERS

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The participation of on-demand AVMS may also be ensured through the creation

of an area in their respective catalogues dedicated to the promotion of European and

Portuguese language works, under terms to be specified in the decree-law that regulates

this law.

The amounts of investment due that, at the end of each cycle of two consecutive

years, are not allocated to direct investment under the terms of paragraph 1 are delivered

by each television operator to the ICA, in January of the following year.

According to Article 16A of the Film Act, where it is not possible to ascertain the

value of the relevant income of on-demand AVMS, the annual value of the investment is

set at EUR 4 000 000. It is considered that it is not possible to calculate the value of the

relevant income of the operators in the following situations:

◼ The income does not have to be declared in Portugal, but in other member states,

and the information made available in those countries does not differentiate

income by geographical origin, making it impossible to calculate the part of the

income obtained in Portugal.

◼ Failure to deliver the legal documents that allow the value of the relevant income

to be calculated.

The Film Act foresees two levies:

◼ Audiovisual commercial communication included in on-demand audiovisual

services are subject to a fee, called an exhibition fee, which is charged to the

advertiser, of 4% of the price paid (Article 10(1)).

◼ Providers of on-demand AVMS by subscription (SVODs) are subject to payment of

an annual charge corresponding to 1% of the amount of the relevant income of

such operators (Article 10(5)).

3.2.15. RO - Romania

127

The Act No 190 of 28 June 2022

128

amended both the Audiovisual Act

129

and the

Government Ordinance No 39/2005 on cinematography.

130

127

The case study on Romania incorporates the kind feedback received from Ruxandra Minea-Cristea

(Romanian Audiovisual Council/Consiliul Naţional al Audiovizualului) during the checking round with the

competent national media regulator within the EPRA network.

128

Lege nr. 190 din 28 iunie 2022 pentru modificarea și completarea Legii audiovizualului nr. 504/2002, pentru

modificarea și completarea Ordonanței Guvernului nr. 39/2005 privind cinematografia, precum și pentru modificarea

Legii nr. 41/1994 privind organizarea și funcționarea Societății Române de Radiodifuziune și Societății Române de

Televiziune, https://legislatie.just.ro/Public/DetaliiDocumentAfis/256901.

129

Lege nr. 504 din 11 iulie 2002 - Legea audiovizualului,

https://legislatie.just.ro/Public/DetaliiDocument/37503.

130

Ordonanță nr. 39 din 14 iulie 2005 privind cinematografia,

https://legislatie.just.ro/Public/DetaliiDocument/63969.

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The Ordinance as amended by the Act foresees that the Fondul cinematografic

(Cinema Fund) be funded a.o. through the following sources:

◼ the monthly collection of a contribution of 3% of the price of films downloaded

for remuneration by means of data transmission services, including via the

internet or telephony, through providers of VOD services, as well as the obligation

to pay the contribution falling to the legal entities that realize these incomes

(Article 13(1)(h) of the Ordinance);

◼ 4% of revenue from single transactions or subscriptions, by VOD providers, for the

viewing of audiovisual works through internet or telephony data transmission

services (Article 13(1)(h

) of the Ordinance).

In the case of the providers established in another member state of the European Union,

the revenues on which the contribution is imposed shall be those obtained in Romania.

The abovementioned provisions of the Ordinance do not apply to providers whose

income, for the last fiscal year, did not exceed the equivalent in lei, at the exchange rate

communicated by the National Bank of Romania, of the amount EUR of 65,000 or whose

audience level is less than 1%, in relation to the number of subscribers at national level,

or to data transmission services providing broadband Internet access (Article 13(1

) and

) of the Ordinance).

The VOD providers referred to in Article 13(1)(h

) may opt for direct financing of a

cinematographic production, up to 40% of the amount owed to the Cinematographic

Fund, at the request of film producers and after prior notification to the National

Cinematography Centre (Article 16(2

) of the Ordinance).

INVESTING IN EUROPEAN WORKS: THE OBLIGATIONS ON VOD PROVIDERS

Page 53

4. Cooperation mechanisms

131

The cross-border application of the financial contribution obligations introduced under

Article 13(2) of the AVMS Directive will pose many challenges in practice for member

states, and primarily for national media regulators. The regulators, meeting within the

European Regulators Group for Audiovisual Media Services (ERGA), worked already before

the adoption of the Directive on identifying these challenges and how best to meet them.

In practice, this means adopting a common approach to the main concepts at stake, and

creating new cooperation mechanisms to facilitate the exchange of information and best

practices. This chapter examines the issues identified by national regulatory authorities

(NRAs) in this context, the role of ERGA in addressing these issues, and the framework put

in place within ERGA through the Memorandum of Understanding adopted in December

2020.

4.1. Main challenges for national regulatory authorities

As described in Chapter 2 of this publication, Article 13(2) of the AVMS Directive

recognises the possibility for any member state to impose financial contribution

obligations on (linear and non-linear) audiovisual media service providers established in

another member state and targeting audiences in its territory.

132

Although, unlike the

obligations relating to the share and prominence of European works, the measures on

financial contributions are not mandatory for member states, their implementation at

cross-border level may nevertheless pose several challenges. One important challenge is

that, as discussed in Chapter 3 of this publication, those member states which have

chosen to implement such a financial obligation have done so in very different ways.

Some have opted for a direct contribution to production or rights acquisition, either

mandatory or voluntary; others apply a mandatory tax or levy payable to a film fund,

either through a contribution to production or rights acquisition, in some cases in addition

to a production investment obligation. Moreover, where it exists, this financial

131

Chapter 4 incorporates the kind feedback received from Kateřina Lojíková (Chair of ERGA Action group on

the implementation of the Memorandum of Understanding) and Anahi Vila (Conseil Supérieur de l'Audiovisuel).

132

The AVMS Directive sets out that such a contribution must only be based on the revenues earned in the

targeted member states and needs to comply with the principles of non-discrimination and proportionality. In

addition, it provides that direct contributions already made by broadcasters should be taken into account by

the targeted member state (Recital 37). If the member state where the service provider is established imposes

a financial contribution, it shall take into account any financial contribution imposed by targeted member

states (Recital 39).

INVESTING IN EUROPEAN WORKS: THE OBLIGATIONS ON VOD PROVIDERS

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contribution is calculated differently from one member state to another. It may be a share

of the total annual revenues generated by the service provider, or a proportion of specific

revenues, such as advertising or licence fee incomes. Finally, the proportion of financing

to be allocated to the promotion of European works varies significantly between member

states.

In all cases, it is understood that the implementation of Article 13(2) AVMSD, in

particular in cross-border cases where another member state’s financial contribution

scheme is applicable to service providers under their jurisdiction, will require that the

relevant national authorities be informed about the economic data relating to foreign

service providers. National Regulatory Authorities (NRAs) are generally best placed to

obtain such information from audiovisual media service providers, although there may be

cases where the relevant data will be collected by other bodies, such as a ministry or state

agency, including national film funds. NRAs are generally responsible for collecting

information on direct investment in content (with some exceptions), while contributions

are made to and collected by national film funds.

The collection and verification of the economic data relating to these services,

which are needed for calculation of the financial contribution they are required to pay on

the basis of the revenues they generate in the targeted member state, may also raise

specific challenges for NRAs in practice. These challenges have been analysed and

discussed by ERGA in a paper aimed at contributing to the consistent implementation of

the revised AVMSD.

133

Firstly, ERGA outlines a challenge in terms of powers, as some NRAs do not

currently have adequate powers to request all the relevant information that NRAs in the

targeted country would need.

Secondly, ERGA points out that the concept of “targeting” a service has not been

defined in the AVMS Directive, and that interpretations of this term may differ at national

level or even come into conflict. Furthermore, ERGA notes that there appears to be no

legal definition of the term in national legislations, meaning that there is no existing

national practice on which NRAs could base their analysis of the term. ERGA considers

that it is important to have a common interpretation and understanding of this concept at

cross-border level for several reasons: on the one hand, in order for a receiving member

state to determine if it is appropriate to impose a financial obligation; on the other hand,

for the member state having jurisdiction over a service provider to identify any financial

obligation already imposed by targeted member states. The same type of challenge exists

in relation to the categorisation of the relevant service, which may also differ from

country to country.

Thirdly, with regard to the procedures and enforcement tools available, ERGA

points out that Article 13 AVMSD does not deal with sanctions, and therefore, it is up to

member states to decide, in compliance with EU law, what type of sanction can be

133

“ERGA Analysis & Discussion Paper to contribute to the consistent implementation of the revised

Audiovisual Media Services (AVMS) Directive”, https://erga-online.eu/wp-content/uploads/2018/11/ERGA-

2018-08-SG3-Analysis-and-Discussion-Paper.pdf.

INVESTING IN EUROPEAN WORKS: THE OBLIGATIONS ON VOD PROVIDERS

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applied in the event that a particular service provider does not comply with the financial

obligations imposed by a targeted member state. In this regard, ERGA stresses that, at

national level, NRAs usually request additional information from service providers in

cases of established non-compliance, as a first step before launching sanction

proceedings. The range of possible sanctions is rather broad, to reflect different levels of

severity: warning letter or reprimand, obligation to publish a press release, restrictions on

advertising revenues, fines, restriction of access to the service and termination of the

service. One of the challenges in applying Article 13(2) according to ERGA will be to

determine which NRA will be responsible for enforcement where member states make use

of the possibility to impose financial obligations on service providers under the

jurisdiction of another member state.

4.2. The role of ERGA

4.2.1. Cooperation between national regulatory authorities

While cooperation between NRAs was already covered in Article 30 of the 2010 AVMSD,

whereby member states (through their regulatory authorities) were required to take

appropriate measures to provide each other and the European Commission with the

information necessary for the application of the Directive, the revised AVMSD has taken

cooperation between NRAs a step further. In fact, the newly introduced Article 30a

emphasises the importance of cooperation between NRAs (rather than between member

states) and brings more clarity as to the process of cooperation and the exchange of

information between NRAs. More specifically, Article 30a(1), refers to the exchange of

information necessary for the application of the Directive (in particular Articles 2 to 4 of

the Directive), while the exchange of information in more specific situations is addressed

in paragraph 2 and 3 of the same Article. Thus, Article 30a(2) refers to the situation where

an NRA receives information from a service provider under its jurisdiction that it will

provide a service “wholly or mostly directed at the audience of another Member State”. In

such a case, the NRA having jurisdiction over the service provider shall provide the NRAs

in the targeted country with ex ante information about this service.

134

More relevant for the application of financial obligations on a cross-border level,

Article 30a(3) addresses expressly the requests for information about “targeting” services.

The new provision establishes that if the NRA of a member state, whose territory is

134

According to ERGA, this duty to inform could provide the NRAs in the targeted territory with ex ante

information about services directed wholly or mostly at their audiences and therefore possibly help in

identifying circumvention strategies. However, ERGA considers that this provision relates merely to the

provision of information once a request has been received and does not foresee further involvement of the

NRA of the targeted member state. For further information, please see “ERGA Analysis & Discussion Paper to

contribute to the consistent implementation of the revised Audiovisual Media Services (AVMS) Directive”, p.

34, op.cit.

INVESTING IN EUROPEAN WORKS: THE OBLIGATIONS ON VOD PROVIDERS

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targeted by a service provider under the jurisdiction of another member state, sends a

“request concerning the activities” of that provider to the NRA of the member state having

jurisdiction over it, the latter NRA shall do its utmost to address the request within two

months, “without prejudice to stricter time limits applicable pursuant to this Directive”. It

should also be noted that, when requested, the NRA of the targeted member state (i.e. the

one sending the request) has an obligation to provide to the NRA of the member state

having jurisdiction any necessary information that may assist it in addressing the request.

The need for cooperation between NRAs is not only based on Article 30a of the

Directive. It has also been specifically called for by the European Commission with regard

to the implementation of measures to promote European works. In particular, in the

Guidelines published in July 2020 on the calculation of the share of European works in

on-demand catalogues and on the definition of low audience and low turnover, the

Commission expressly encourages national authorities to cooperate actively with their

counterparts in other member states, in particular with regard to the exemption of

specific categories of service providers.

135

The Commission points out that such

cooperation might be warranted especially with a view to gathering relevant data or

information and to limit the risks of divergent interpretations by national authorities. The

Commission further indicates that ERGA could be an appropriate forum for facilitation of

such cooperation. In this regard, the NRAs are invited to exchange information, data, and

best practices within ERGA and to discuss any issues faced in the application of these

guidelines.

4.2.2. The formal recognition and reinforcement of the role of

ERGA

Reflecting this growing trend towards cooperation between NRAs, the AVMS Directive

also formalised the existence and strengthened the role of ERGA. In particular, Article 30b

AVMSD specifies the main missions of ERGA, namely: the provision of technical expertise

to the European Commission; the promotion of the exchange of good practices on the

application of the provisions of the Directive; the fostering of cooperation and the

exchange of information necessary for the application of the Directive. In terms of

cooperation, Article 30b also provides that ERGA has a role to play in facilitating the

exchange of regulators’ experiences and practices in the application of the regulatory

framework applicable to audiovisual media services.

In practice, upon adoption of the AVMS Directive and even before the publication

of the European Commission’s 2020 implementation guidelines, ERGA had started

working on how to address the various challenges raised by the implementation of the

AVMSD, including with respect to the cross-border application of the financial

contribution obligations. Among the options considered, cooperation between NRAs

regarding the exchange of information and the sharing of best practices was at the

135

For more details, please refer to Chapter 3 of this publication.

INVESTING IN EUROPEAN WORKS: THE OBLIGATIONS ON VOD PROVIDERS

Page 57

forefront of the discussions and extended beyond the specific issue of implementation of

exemptions.

In particular, ERGA highlighted the underlying need for NRAs to be empowered, on

a national basis, to collect and share all relevant economic data they need, in order to

facilitate the application of cross-border financial contributions (as well as all relevant

information on targeting services). In addition, ERGA stressed at an early stage the

importance of NRAs defining and agreeing on a common cooperation scheme for the

collection and exchange of information in relation to the implementation of the financial

contribution at cross-border level. According to ERGA, such a scheme would include a

regular exchange of best practices between NRAs, reporting on internal procedures

regarding verification of the accuracy of economic data provided by service providers, and,

in the longer term, the possible development of standardised declaration forms.

Furthermore, ERGA highlighted the need to strengthen the exchanges between NRAs and

national film funds through the European Film Agencies Directors (EFAD) network so they

may benefit from the pooling of resources and knowledge.

On a more general level, ERGA proposed that member states discuss with the

European Commission possible common approaches to addressing cases of non-

compliance with the obligation to contribute financially to the production of content on a

cross-border basis early in the transposition period, in order to work towards a common

approach to the application of Article 13(2). Similarly, ERGA proposed that NRAs define

and agree on a common approach on how to address cases of non-compliance with cross-

border financial contributions (possibly based on Article 30a(3) AVMSD).

4.2.3. Memorandum of Understanding between NRAs that are

members of ERGA

In line with this preliminary work on the organisation of cooperation on a practical level

and in light of the specific roles for the NRAs envisaged by the revised AVMS Directive,

the NRAs that are part of ERGA adopted in December 2020 a Memorandum of

Understanding (MoU).

136

This MoU aims at setting out a framework for collaboration and

information exchange between the NRAs within ERGA in order to resolve practical issues

arising from the implementation of the Directive in a consistent manner. It fixes clear

objectives for collaboration,

137

as well as common interests among the participants to the

136

Memorandum of Understanding between the National Regulatory Authority Members of the European

Regulators Group for Audiovisual Media Services, 3 December 2020, https://erga-online.eu/wp-

content/uploads/2020/12/ERGA_Memorandum_of_Understanding_adopted_03-12-2020_l.pdf.

137

The key objectives of the MoU include: strengthening cooperation between NRAs with a view to consistent

and effective implementation of the revised AVMSD; setting out a framework for cooperation and

collaboration; addressing the challenges relating to the cross-border enforcement of certain provisions;

facilitating information-sharing by NRAs, etc. (MoU, Article 1.2.).

INVESTING IN EUROPEAN WORKS: THE OBLIGATIONS ON VOD PROVIDERS

Page 58

MoU

138

and principles that should be used by NRAs as a guide to assess their

responsibilities with regard to other NRAs in the day-to-day operation of the framework of

cooperation envisaged by the MoU.

139

Among the areas of cooperation envisaged, the MoU addresses cooperation issues

related to the possibility for member states to impose a financial obligation on services

established outside their national jurisdiction, pursuant to Article 13(2) (Section 2.2.2. of

the MoU). In particular, the NRAs undertake, through this MoU, to reach a common

understanding of certain issues arising under Article 13(2), a common recognition of some

of the implications of that Article for cooperation, and the delivery of specific cooperation

mechanisms in respect of that Article.

4.2.3.1. A common understanding of issues related to Article 13(2)

Through the MoU, NRAs commit to a common understanding that the financial

contributions allowed under Article 13(2) AVMSD may apply to service providers

established outside their territory but targeting audiences in their territory and that they

may take multiple forms (direct investments, levies payable to a fund, acquisition of rights

in European works).

They agree that any member state wishing to apply such a financial contribution

to a targeting service must be able to demonstrate that audiences in its territory are

targeted by that service, on the basis of the indicators referred to in Recital 38 AVMSD

(such as advertising specifically aimed at customers in its territory, the main language of

the service or the existence of content or commercial communications specifically aimed

at the audience in the receiving member state).

The participants to the MoU understand that any such financial contribution must

be proportionate, non-discriminatory, and calculated solely on the basis of revenues

generated in the targeted member state; they agree that any targeted member state that

makes use of the possibility provided for in Article 13(2) is competent to determine, in

accordance with EU law, the modalities of implementation and enforcement of these

national rules by an NRA in respect of a foreign-based targeting service.

138

The common interests of NRA participants to the MoU include: implementing the revised AVMSD; ensuring

media pluralism, cultural diversity, the protection of audiences (and especially minors), the promotion of

freedom of expression, the proper functioning of the internal market and the promotion of fair competition;

ensuring a high level of consumer protection; respecting and protecting human dignity and tackling

audiovisual content inciting to violence or hatred; exchanging experience and best practices; ensuring the

independence of NRAs; cooperating and exchanging information (MoU, Article 1.1.).

139

The principles of cooperation between participants to the MoU are the following commitments: (1)

promoting the values of the AVMSD; (2) recognising NRA interests; (3) acting transparently and in good faith;

(4) cooperating effectively and efficiently; (5) promoting and respecting the rule of law; (6) recognising the

limitations to cooperation; (7) recognising the country-of-origin principle; (8) implementing and improving

progressively; (9) acting reasonably (MoU, Article 1.3.).

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4.2.3.2. A common recognition of implications of Article 13(2) for cooperation

The participants to the MoU recognise that all NRAs have a common interest in being

aware of the financial obligations that services under their jurisdiction may be subject to

in other member states. They recognise that the implementation of such financial

contributions raises specific challenges for NRAs and service providers alike as the latter

might have to comply with the rules of several EU member states at the same time,

depending on their location and on which countries their services are targeting. Further,

financial schemes applicable to service providers may vary between member states.

They recognise that having readily accessible and accurate information about a

service provider’s activities, including about whether it is targeting audiences in another

territory and the revenue it generates in that territory, is a prerequisite for effective

implementation of such financial contributions by targeted member states.

They agree that the NRA in the targeted member state is the one responsible for

the administration of the financial contributions applied to the targeting service and that

the NRA in the member state of establishment may be able to provide assistance given

the insight and experience it has accumulated in engaging with the services under its

jurisdiction and as the authority responsible for enforcing different obligations provided

for by the AVMS Directive.

NRA members to the MoU recognise that, without prejudice to the competence of

the NRA in the targeted member state to engage with foreign-based service providers

directly, appropriate information-sharing and cooperation arrangements between NRAs

have therefore the potential to alleviate the burden, for some service providers, of having

to declare their revenues, investments, and levies paid in multiple countries.

4.2.3.3. Specific cooperation arrangements in respect of Article 13(2)

In this context, the participants to the MoU have agreed to make specific cooperation

arrangements in respect of Article 13(2), where this is both (i) justified having regard to

the common interests of the participants to the MoU and the objectives of the MoU; and

(ii) consistent with the principles of cooperation of the MoU.

More specifically, specific cooperation arrangements are likely to be justified in

the following scenarios (sub-section 2.2.2.3. of the MoU):

◼ In order for the NRA in the targeted member state to determine whether a

foreign-based service provider may be subject to financial obligations based on

knowledge of the revenues it generates by targeting audiences in the territory of

its member state.

◼ Where appropriate, in order for the NRA in the targeted member state to calculate

the level of financial contribution based on the sole revenues generated by

foreign-based service providers in the territory of its member state and therefore

to avoid the risk of double imposition.

◼ In order for the NRA in the targeted member state to ensure that the financial

contribution imposed on foreign-based service providers is not discriminatory and

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disproportionate when compared to the rules with which domestic service

providers have to comply.

◼ In order for both NRAs to be able to check whether the information declared by a

given service provider about the investments made in European works, as well as

the levies paid to national funds, are in line with its obligations in the respective

member states.

Where it is consistent with the MoU’s cooperation principles, including by having regard

to any genuine limitations to cooperation that may be relevant in the context of the

exchange of information (such as statutory duties of the NRA), the participants to the MoU

commit to the following:

◼ They will share the details of financial contribution schemes applicable to service

providers established in their territory and those targeting their audiences while

established in another member state’s territory, within a centralised register.

◼ Where appropriate and justified, NRAs in the member states where the service

provider is established, upon request from the NRAs in the targeted member

states, agree to collect and store information about the revenues that these

services generate in the EU, and/or the investments they make in European works

and the levies they pay to national funds in their country of establishment.

◼ In accordance with a procedure for “Requests for Information” laid down in the

MoU (sub-section 2.1.2), NRAs in the member states where the targeting service

provider is established agree to share with the requesting NRA the accounting

information they have collected directly, or indirectly through assistance of

another regulatory authority or body, which is relevant to the country of the

requesting NRA.

◼ When such information is shared with the requesting NRA, confidentiality must be

ensured at all stages through an appropriate protocol. In case the initial

information provided was not accurate or complete, NRAs in the member states

where the service provider is established shall undertake best efforts to respond

to the request of the requesting NRA.

◼ NRAs in the targeted member states agree to share their legal and economic

assessments of how a service established outside of their jurisdiction is deemed

liable to pay financial contributions to the funding of European works. The

information should be transmitted to the NRA in the member state where the

service provider is established and should provide for a minimum set of

information (such as a brief account of the applicable rules; the level of the

financial contribution imposed; and where appropriate, an account of how the

financial obligations imposed in the member state of establishment have been

taken into account).

◼ They will share with the NRA in the member state where the service provider is

established any assessment according to which a service has failed to comply with

its financial obligations pursuant to the national law of the targeted member state

and, where relevant, what regulatory actions might be taken, including any

sanction it may be exposed to as a result.

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◼ They will work together to develop a common declaration form for service

providers within their jurisdiction laying down the accounting information which

service providers are required to share with national regulatory authorities in

order to determine the annual turnover of relevant service providers. In

developing such a form, NRAs should aim to ensure the collection of information

that might be required by other NRAs to enforce the relevant levies on the service,

drawing reference from the central register. The form should require service

providers to break down their overall revenues per country and be accompanied

by a statement from a chartered accountant certifying that the information is

accurate.

◼ NRAs will endeavour, to the maximum extent possible, to align the cycle of any

funding schemes, in particular for the purpose of checking service providers’

compliance with their investment obligations.

This MoU shows that cooperation between regulators within the EU is taking on a new

dimension in practice, commensurate with the role that these bodies are expected to play

in the successful implementation of financial contribution obligations at the transnational

level. Although these obligations still exist in a relatively small number of countries, the

lessons learned from their implementation will certainly constitute a ‘before and after’ for

regulators in terms of cross-border and even, in some cases, inter-institutional

cooperation at the national level.

4.2.4. Next steps

Strengthening cooperation in cross-border cases remains one of ERGA’s key strategic

priorities for 2022. As a follow-up to the adoption of the MoU, an Action Group was

created within ERGA in 2022, aimed at securing immediate application and administration

of the MoU via concrete work on implementation of the tasks foreseen in the MoU. The

work of the Action Group will aim at ensuring fluid and close cooperation as regards

cross-border cases, with due respect to the country of origin principle.

As stated in the ERGA Work Programme 2022, the Action Group will follow up on,

and supervise closely, the enforcement of measures foreseen by the MoU with an eye on

emerging cross-border cases, as well as on the potential need for improvement in

cooperation. This will include potential updates to the register on national financial

schemes under Article 13(2) of the AVMSD, established pursuant to the MoU.

140

The Action Group will specifically monitor the application of the MoU, as regards:

◼ Requests for information

140

According to Art. 2.2.2.3.1. of the MoU, the participants commit to “share the details of financial

contributions schemes applicable to audiovisual media service providers established in their territory and

those targeting their audiences while established in another Member State’s territory, within a centralised

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◼ Requests for mutual assistance

◼ Requests for accelerated mutual assistance

◼ Cooperation in respect of Article 28b AVMSD

◼ Cooperation in respect of Article 13(2) AVMSD

◼ Use of the Standard form

141

In doing so, the Action Group will gather and maintain the records of the steps that NRAs

have taken to implement the MoU and maintain records of the nature and number of

requests for cooperation according to the MoU.

4.3. Case study: France

4.3.1. Agreements between the CSA and the main foreign-

based on-demand AVMS providers

Following on from the transposition of the AVMS Directive through the Ordinance of 21

December 2020,

142

the On-Demand Audiovisual Media Services Decree of 22 June 2021

143

obliges foreign platforms to invest in the French and European film and audiovisual

sector. Previously, only France-based service providers had been required to finance the

film-making industry. The French national audiovisual regulator CSA (Conseil supérieur de

l’audiovisuel – since 1 January 2022, the Autorité de régulation de la communication

audiovisuelle et numérique, ARCOM) can adapt these obligations in the relevant

agreements signed with the platforms (Article 8 of the Decree). It can also impose

sanctions if they are not met (Article 43-7 of the Law of 30 September 1986), with fines of

up to double the annual sum payable, or three times, in cases of recidivism.

On 9 December 2021, the CSA announced that it had signed agreements with the

main on-demand AVMS providers based in other EU member states that provide film and

audiovisual services in the French market, i.e. Netflix, Disney +, Amazon Prime Video for

its subscription-based service, and Apple App – iTunes Store. It had also notified them in

writing of their obligation to invest 20% of the turnover they generate from subscription-

based services in France, with 80% of this sum going to audiovisual production and 20%

141

Among the tasks of the Action Group, the development of standard forms to be used by the participants in

the MoU in the context of the general and specific cooperation framework envisioned in the MoU is foreseen.

142

Ordonnance n° 2020-1639 du 21 décembre 2020 portant mesures d'urgence en matière d'activité partielle

(Ordinance n° 2020-1639 of 21 December 2020 on emergency measures relating to partial activity),

https://www.legifrance.gouv.fr/jorf/id/JORFTEXT000042722461?msclkid=bae136b3ab8a11ec88c8e6ba24d1aca4.

143

Décret n° 2021-793 du 22 juin 2021 relatif aux services de médias audiovisuels à la demande (Decree n°

2021-793 of 22 June 2021 relating to on-demand audiovisual media services),

https://www.legifrance.gouv.fr/jorf/id/JORFTEXT000043688681?msclkid=6ffc304eab8911ec85d006db69e564

5b.

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to cinema production.

144

The total expected contribution to production is expected to be

between EUR 250 and 300 million per year.

145

Under a decree of 4 February 2022,

146

a new agreement on the adjustment of

media chronology to all the companies concerned completed the integration of these

platforms into the financing system for French and European film-making.

147

4.3.2. Agreement between film organisations and Netflix

On 22 February 2022, the French film organisations Blic, Bloc and ARP announced that

they had signed their first agreement with a subscription-based on-demand video service,

Netflix.

148

The three-year agreement follows on from the Decree of 22 June 2021, which

obliges foreign service providers to fund French and European film-making. Previously,

only French providers had been under such an obligation.

As part of its obligation to invest 4% of its net turnover generated in France,

Netflix has agreed to contribute at least EUR 30 million per year to French-language film

production. The agreement also contains a diversity clause requiring Netflix to contribute

at least 17% of its funding to French-language films with a budget of EUR 4 million or

less, and stipulates that it should fund at least 10 films per year. In total, Netflix is

expected to invest around EUR 40 million in French and European film production in

2022. In return for its investment, and pursuant to the Ordinance of 4 February 2022,

Netflix will have exclusive rights to show the films for seven months, starting 15 months

after their release in cinemas.

149

144

CSA, press release of 9 December 2021, https://www.csa.fr/Informer/Espace-presse/Communiques-de-

presse/Le-regulateur-integre-les-principaux-SMAD-internationaux-au-systeme-francais-de-financement-de-

la-creation.

145

Blocman, A., “[FR] International on-demand audiovisual media service platforms reach agreement with CSA

on their obligations towards French and European audiovisual and film production”, IRIS Legal Observations,

IRIS 2022-1:1/5, European Audiovisual Observatory, Strasbourg, France, http://merlin.obs.coe.int/article/9363.

146

Arrêté du 4 février 2022 portant extension de l'accord pour le réaménagement de la chronologie des

médias du 24 janvier 2022 (Order of 4 February 2022 extending the agreement on the reorganisation of the

media chronology of 24 January 2022),

https://www.legifrance.gouv.fr/jorf/id/JORFTEXT000045141748?msclkid=e72a228dab8f11ec84386b4a0b9ea7

6b.

147

For more details, please see: Blocman, A., “[FR] New media chronology completes audiovisual reforms”,

IRIS Legal Observations, IRIS 2022-3:1/10, European Audiovisual Observatory, Strasbourg, France,

http://merlin.obs.coe.int/article/9423.

148

Media release of BLIC, BLOC and Netflix, 22 February 2022,

https://www.la-srf.fr/article/communiqu%C3%A9-blic-bloc-arp-

netflix?msclkid=9fb3cbe3ab8811ec88104f057e118e73.

149

Blocman, A., “Investment obligations for foreign providers: first agreement between French film industry

and Netflix”, IRIS Legal Observations, IRIS 2022-3:1, European Audiovisual Observatory, Strasbourg, France,

http://merlin.obs.coe.int/article/9424.

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5. Case law: From an absolute to a

relative country-of-origin principle

Few courts have yet had to rule on the extraterritorial application of financial

obligations, under Article 13(2) AVMSD. Mainly, the countries that considered this aspect

did so prior to the revision of the AVMS Directive, and the new wording of Article 13(2)

has answered existing doubts about the possibility of applying financial obligations to

services located outside the national territory. In this respect, it is interesting to analyse

the reasoning followed by the European Commission on Germany’s aid scheme for films,

where everything started, and by the General Court of the EU in the subsequent Netflix

case, which recognised the legal basis of this extraterritorial application.

Although the process of transposition at national level is still too recent to give

rise to case-law on the cross-border application of financing obligations, two decisions

deserve to be highlighted. The first concerns a question referred to the Court of Justice of

the European Union (CJEU) by the Supreme Administrative Court of Portugal for a

preliminary ruling on the compatibility of quotas for works in the national language with

the principle of freedom to provide services. The second concerns the freedom to provide

services, and access to national support funds financed by taxes for operators established

abroad.

5.1. The European Commission’s decision on Germany’s aid

scheme for films

The German Law on the funding of film production (Gesetz über Maßnahmen zur Förderung

des deutschen Films – “Filmförderungsgesetz”) codifies an aid scheme for the funding of

film production, distribution and exhibition, to be financed by a special levy imposed on

undertakings in the cinema and video industry and the broadcasting sector.

150

In March 2014, Germany informed the European Commission of an amendment to

the existing aid scheme, which extended liability for the levy to providers of video-on-

demand services established outside Germany receiving revenue from customers in

150

See also, European Commission, Commission decision of 3.12.2013 on the aid scheme SA.36753 (2013/N) -

Germany Filmförderungsgesetz, C(2013) 8679 final, 3 December 2013,

http://ec.europa.eu/competition/state_aid/cases/248820/248820_1491791_130_2.pdf.

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Germany through a German-language Internet presence. The amendment was to apply

from the date of its approval by the Commission until 31 December 2016, and if the

Commission approved the scheme, the levy would be recovered retroactively as from the

date of the entry into force of the amendment – namely, 1 January 2014.

On 1 September 2016, the European Commission issued its decision,

151

and found

that the measures were compatible with the Treaty on the Functioning of the European

Union (TFEU), and did not infringe the Audiovisual Media Services Directive (2010/13/EU)

(“AVMS 2010”).

152

The Commission’s decision first recalled that Article 107(3)(d) TFEU provides that

“aid to promote culture and heritage conservation where such aid does not affect trading

conditions and competition in the Union to an extent that is contrary to the common

interest” may be considered to be compatible with the internal market. The Commission

noted that it had already found the current scheme compatible with Article 107 in its

Decision SA.36753 (3 December 2013), and stated that “the extension of the range of

possible beneficiaries to firms established elsewhere does not negatively affect the

compatibility assessment under that Article”.

Next, the Commission considered whether the levy violated Article 110 TFEU,

which provides that “no Member State shall impose, directly or indirectly, on the products

of other Member States any internal taxation of any kind in excess of that imposed

directly or indirectly on similar domestic products [or] any internal taxation of such a

nature as to afford indirect protection to other products”. The Commission decided that

the new tax did not infringe Article 110, as “foreign video-on-demand providers may

benefit also in practical terms equally from the funding”, and “[the] scheme provides for

effective means to allow the foreign VOD providers to apply for distribution aid in the

same way as their German competitors”.

Finally, the Commission examined whether the measures violated the AVMSD

(2010). In this regard, Article 2(2)(a) AVMSD (2010) contains the country-of-origin

principle, and provides that “media service providers under the jurisdiction of a Member

State are … those established in that Member State in accordance with paragraph 3”. On

the other hand, Article 13(1) AVMSD (2010) concerns the promotion of European works

and provides that member states must “ensure that on-demand audiovisual media

services provided by media service providers under their jurisdiction promote, where

practicable and by appropriate means, the production of and access to European works”.

Two interested parties in the procedure argued that the tax would constitute a

measure to promote access to European works, in violation of the country-of-origin

principle. However, the Commission decided that the “validity of the application of the tax

to certain VOD providers which provide their services from locations outside Germany” did

151

European Commission, Commission decision of 1.9.2016 on the aid scheme SA.38418 - 2014/C (ex

2014/N), which Germany is planning to implement for the funding of film production and distribution, C(2016)

5551 final, 1 September 2016,

http://ec.europa.eu/competition/state_aid/cases/254981/254981_1779718_146_2.pdf.

152

See also, Beckendorf, I., Germany: Draft of a new film support act adopted, IRIS Legal Observations, IRIS

2016-6:1/11, European Audiovisual Observatory, Strasbourg, France, http://merlin.obs.coe.int/article/7600.

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not violate the AVMS Directive. The Commission stated that “an interpretation according

to which the country-of-origin principle” applies to the tax at issue would lead “to

situations in which providers active on the same market are not subject to the same

obligations”.

Moreover, the Commission had regard to the proposed amendment to the AVMSD

(2010) which clarified in particular that member states have the right to require providers

of on-demand audiovisual media services targeting audiences in their territories but

established in other member states, to make such financial contributions. The

Commission decided that the proposal was “a clarification of what could already be

possible under the Directive currently in force”.

5.2. The Netflix v. European Commission case

Following the Commission’s decision, Netflix International, an online video-streaming

service established in the Netherlands that launched its service in Germany in 2014 and

became subject to the levy, applied to the General Court of the European Union to have

the Commission’s decision annulled. Netflix International, together with its parent Netflix

Inc., argued that the Commission’s decision had been based on an incorrect interpretation

of the AVMS Directive and infringed the TFEU.

On 16 May 2018, the General Court of the European Union delivered its judgment

in Netflix International BV v. European Commission,

153

finding inadmissible Netflix’s

application for the annulment of the European Commission’s 2016 decision on Germany’s

aid scheme for the funding of film production and distribution.

154

Without addressing the substance of Netflix’s application, the General Court

declared the application inadmissible. The Court stated that under Article 263 of the

TFEU, an application for the annulment of a Commission decision is admissible only if the

applicants are directly affected by the contested decision, the decision takes the form of a

regulatory act that does not contain implementing measures, or the applicants are

directly and individually affected by the contested decision. Netflix had argued that it had

been “specifically targeted”, arguing that the explanatory memorandum to the FFG

“explicitly refers to them in stating that ‘the market-leading company … is far ahead of its

competitors [and] is also established elsewhere in Europe’”, and that the German Film

Board (Filmförderungsanstalt) had “contacted them immediately after the adoption of the

contested decision in order to discuss payment of the levy and the provision of

information”.

153

Judgment of the General Court (Eighth Chamber) of 16 May 2018, Case T‑818/16, Netflix v Commission,

https://curia.europa.eu/juris/document/document.jsf?text=&docid=202021&pageIndex=0&doclang=en&mode

=lst&dir=&occ=first&part=1&cid=776368.

154

Ó Fathaigh, R., European Commission: Decision on funding of film production and distribution in Germany,

http://merlin.obs.coe.int/article/7685.

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The Court rejected Netflix’s arguments, holding that it did not meet the

cumulative conditions set out in the fourth paragraph of Article 263 TFEU, as it was

affected by the contested decision only as a non-domestic video-on-demand distributor

that provides services in the German language on German territory. The national

legislation authorised by the contested decision therefore applies to Netflix only by

reason of their objective legal and factual situation under a general rule. Lastly, as

regards Netflix’s argument that it is obliged to infringe the law in order to be able to

claim the invalidity of the contested decision,

155

the Court noted that Netflix was entitled

to access to a court without being obliged to infringe the law and that in proceedings

before national courts it could plead the invalidity of the contested decision and ask those

courts to request a preliminary ruling from the Court of Justice.

5.3. Freedom to provide service, and quotas for “national

works”

Although the financial obligation in Article 13(2) of the AVMS Directive concerns the

promotion of “European” works, on the basis of the definition of such works provided by

the Directive, some member states have implemented it in their national law with the aim

of reinvesting part of the revenue in “national” works. For example, some countries have

provided for sub-quotas in their legislation to promote films and audiovisual works which

must have been made in the national language (or “dialect”) as the original language of

expression.

156

In a recent case, the Portuguese Film and Audiovisual Media Institute (Instituto do

Cinema e do Audiovisual, I.P.) appealed against the judgment of 20 November 2018 given

at first instance by the Administrative and Finance Court of Almada (Tribunal

Administrativo e Fiscal, TAF), by which that court declared the subscription fee (levy)

payable by operators of subscription television services to the Film and Audiovisual Media

Institute for access to television programming services in the national territory, to be

contrary to the freedom to provide services laid down in Article 56 TFEU.

On 10 March 2021, the Supreme Administrative Court of Portugal (Supremo

Tribunal Administrativo) referred to the Court of Justice of the European Union (CJEU)

157

the

question of whether the fact that this funding reduces the cost of national film and

audiovisual productions and thus favours the purchase of such productions over

155

Specifically, before a German court, Netflix is entitled to claim its rights in two types of situations: a

situation in which they might be brought before a court following non-payment of specific tax notices, or

following failure to cooperate in the context of a tax procedure. In such a case, Netflix argued that they would

have been obliged to infringe the law in order to have access to a court.

156

For more details on national schemes, please refer to Chapter 3 of this publication.

157

Case C-411/21, Request for a preliminary ruling from the Supremo Tribunal Administrativo (Portugal)

lodged on 5 July 2021 – Instituto do Cinema e do Audiovisual, I.P. v NOWO Communications, SA. Case C-411/21,

https://curia.europa.eu/juris/document/document.jsf?docid=248684&doclang=EN&msclkid=4cc87316b4f711e

c973df15a308c0a03.

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productions from other member states, gives rise to indirect discrimination against the

cross-border provision of such services, thereby infringing the freedom to provide services

established in Article 56 TFEU.

More specifically, the referring court requested of the CJEU a preliminary ruling on

whether the fee, if interpreted as meaning that it should be used exclusively to finance

the promotion and dissemination of Portuguese films and audiovisual works, is liable to

give rise to indirect discrimination against the provision of services between member

states as compared with the corresponding national provision of services, inasmuch as it

makes the provision of services between member states more difficult than the purely

domestic provision of services within a member state, thus infringing Article 56 TFEU.

Secondly, the court sought clarification on the question of whether the fact that

other member states had introduced identical or similar levy obligations in respect of

domestic and non-domestic providers could impact the assessment of the Portuguese

subscription fee at issue.

The conclusions of the CJEU, in this case, could have far-reaching implications for

the various national film funding schemes financed by the levy obligation as well as for

direct investment obligations, which go beyond the type of media service providers

concerned (i.e. operators of subscription television services).

5.4. Freedom to provide services, and access to national film

funds funded by levies

Indirect financial levies for the support of audiovisual and film productions are collected

via special film funds of member states. According to Recital 36 of the AVMS Directive,

“media service providers that are required to contribute to film funding schemes in a

targeted member state should be able to benefit in a non-discriminatory way, even in the

absence of an establishment in that member state from the aid available under respective

film funding schemes to media service providers.” The Directive aims, through this

provision, to ensure equal access to the resources of the fund for all service providers who

have borne the burden of the levies. However, at national level, a certain asymmetry may

remain between the obligation to pay a levy to a film fund which extends to non-

domestic service providers targeting a local audience and their eligibility to receive

financial support from the fund.

For example, in an Opinion issued on 17 March 2021 concerning the draft Decree

on On-Demand Audiovisual Media Services, the French national regulatory authority, the

former CSA (now ARCOM), expressed its views on the French system in this respect.

158

Avis du 17 mars 2021 relatif au projet de décret relatif aux services de médias audiovisuels à la demande,

(Opinion of 17 March 2021 relating to the draft Decree on audiovisual media services),

https://www.csa.fr/content/download/260153/807996/version/2/file/CSA%20-

%20Avis%20d%C3%A9cret%20SMAD.pdf.

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detailed in Chapter 3 of this publication, the French system of support for film and

audiovisual creation, which is mainly aimed at independent producers, is financed, inter

alia, by taxes imposed by the General Tax Code, collected by the tax administration and

allocated to the French film fund, the National Centre for Cinema and the Moving Image

(Centre national du cinma et de l’image anime, CNC). Cross-border streaming service

providers established outside France but operating on French territory have been subject

to the tax since 2018, initially at a rate of 2%, and was increased to 5.5% in 2020.

However, the eligibility criteria that independent producers must meet in order to benefit

from the fund's support amount to exclusion of producers pre-financed by a provider

established outside France. Given that, since 2020, non-French providers offering their

services in France are subject to the same tax obligation as domestic streamers, it is

reasonable to ask whether retaining funding support for producers working with foreign

streamers would not appear to be an asymmetrical discriminatory requirement that

strengthens the competitiveness of domestic SVOD providers and could be considered as

a restriction to the free movement of services.

In its Opinion issued before the publication of the Decree, the CSA drew the

Government's attention to the need to preserve the overall coherence of the support

system for audiovisual and cinematographic creation. The regulator, while recognising the

serious budgetary constraints faced by the CNC due to the effects of the Covid-19 crisis,

nevertheless considered that this system should be progressively extended to works

financed by all SVOD services subject to the obligation to contribute to the financing of

creation.

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6. State of play

Article 13(2) AVMSD leaves plenty of leeway for member states to introduce financial

obligations on VOD services. Most member states have already introduced obligations

among the different types of obligations available, with a clear preference for direct

investment obligations, and whenever they have introduced obligations for domestic

services, they have done the same for targeting services. As to the level of investments,

Italy and France have chosen to impose much higher obligations than the other member

states.

The current situation with regard to covered countries that have chosen to

introduce financial obligations, as per 22 September 2022, is as follows:

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Figure 14. Covered countries with financial obligations

As shown in Chapter 3, when zooming in on how the obligations have been detailed with

regard to AVMS providers falling under national jurisdiction, a certain variety appears,

which applies as a rule both to domestic and targeting services.

Source: European Audiovisual Observatory

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Figure 15. Type of financial obligations

Source: European Audiovisual Observatory

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The cross-border application of the financial contribution obligations will certainly be one

of the greatest challenges to the application of the revised AVMSD.

As mentioned in Chapter 4 of this publication, imposing obligations on targeting

services will require that the relevant national authorities be informed about the

economic data relating to foreign service providers. Moreover, the collection and

verification of the economic data relating to these services may also raise specific

challenges for NRAs in practice, such as those relating to the power to request all relevant

information, defining what a targeting service is, and applying enforcement and

sanctioning regimes. Certainly, the enhanced role of ERGA will play a fundamental role in

this regard, and strengthening cooperation in cross-border cases will certainly be one of

ERGA’s key strategic priorities for the future.

Given the delayed implementation of the revised AVMSD, it is too soon to draw

any conclusions as to the effects of these obligations on the market.

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7. Annex

For an overview of the transposition into national law of Articles 13 (1) and (2), 16 and 17

AVMSD, see the tables available at https://rm.coe.int/iris-plus-2022-2-tables/1680a6889d.