The audiovisual sector and 'on demand' taxation

The fee on audiovisual services on demand by subscription is added to the investment obligations that already hinder the sector and, as well, to the other fees previously approved (eg, exhibition fee and subscription), mechanisms that are all oriented towards the same end: the financing of the Portuguese State in the return of the support programs and incentive measures to the sector, instituted by it.

On November 19, 2020, Law no. 74/2020 was published in Diário da República, which introduced a series of changes covering the audiovisual sector, to be in force on February 17, 2021, highlighting -if: (a) approval of a new annual fee - the fee on audiovisual services on request by subscription; and (b) the expansion of the scope of incidence of the exhibition fee, previously approved by Law No. 55/2012, of 6 September.

The fee on audiovisual services on demand by subscription is added to the investment obligations that already hinder the sector and, as well, to the other fees previously approved (eg, exhibition fee and subscription), mechanisms that are all oriented towards the same end: the financing of the Portuguese State in the return of the support programs and incentive measures to the sector, instituted by it.

With regard to the exhibition fee, it is extended to be subject to the cases in which the audiovisual commercial communication is disseminated in video sharing platform services and in the programs disseminated or made available by them. Although the charge with the referred fee is the responsibility of the respective advertiser, its settlement operates through tax substitution, with the respective operators being responsible for the settlement.

It is further clarified that the aforementioned fee applies to audiovisual commercial communications, even if such services are under the jurisdiction of another Member State of the European Union, in relation to the profits realized in the national market.

The rate on audiovisual services on demand by subscription, fixed at 1%, also applies to the content made available by the respective operators, in national territory, thus encompassing the provision of video on demand and streaming services. For the purposes of calculating the tax base of the new tax, the relevant income of operators of audiovisual services on request by subscription, calculated in the previous year, that is, the income from the provision of the services in question, namely, from subscriptions or one-off transactions.

Note that Law No. 74/2020, of 19 November, contains a legal presumption as to the cases in which it should be considered that it is not possible to ascertain the relevant income. In such cases, the annual fee payable is fixed at EUR 1.000.000.

The legislative instrument for regulating this Law is still pending publication, which is expected to define, in greater detail, certain aspects of law enforcement, namely, settlement and payment procedures and deadlines.

The new approved tax thus reinforces the myriad of fees and contributions that are in force in the Portuguese tax system, and often of dubious legal-tax qualification, representing an additional and tendentious manifestation of the parafiscal State, this time calling on the audiovisual sector to to contribute “to order, at the request” of the Portuguese State, as a guarantee / supply of public financing needs.

This paradigm raises the question of how the audiovisual sector will contribute to the financing of the Portuguese State in the return of support programs and incentive measures to the sector, and discussions about the conditions for applying the new rate are anticipated. Let's see if the legislative instrument for regulating the current Law will provide sufficient clarifications.

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