Swiss voters taking part in a referendum have approved legislation requiring streaming services to invest 4 percent of their domestic revenues in local film productions or pay the government an equal amount.
In October 2021 the Federal Assembly (parliament) approved the “Lex Netflix” law requiring streaming services that don’t invest at least 4 percent of their Swiss revenues in local film productions to pay an equal amount to the Federal Office of Culture, which will use the proceeds to fund the production of films on which at least 50 percent of the crew and cast are Swiss.
Opponents of the legislation say it will lead to higher subscription prices for streaming services and, possibly, less content available to Swiss subscribers. The youth wings of the Centre party, the Green Liberal Party, the Liberal Party, and the Swiss People’s Party gathered the required 50,000 signatures to subject the law to a referendum.
On May 15 approximately 40 percent of the Swiss electorate voted in the referendum, with the yes votes prevailing 58.4 percent to 41.6 percent.
The law also states that at least 30 percent of all content provided over a streaming service’s platform in Switzerland must be produced in Europe. That provision mirrors a requirement in a 2018 revision to the EU’s Audiovisual Media Services Directive, which member states were required to transpose into national law by September 2020. (Switzerland is not a member of the EU.)
It’s not clear how the United States, which is home to big streaming companies like Amazon, Apple, and Netflix, will respond to the Swiss law. Washington has threatened retaliatory trade action against countries with digital services taxes, which it views as discriminatory against American companies.
Countries that are part of the OECD’s two-pillar agreement to adapt the taxation of multinational corporations to the challenges of the digital economy have committed to removing any unilateral measures they’ve adopted taxing digital activity and pledged to avoid introducing unilateral DSTs in the future. In March the Swiss Federal Council published proposed legislation to levy a supplementary tax on large multinational enterprises to ensure that they pay an effective tax rate of 15 percent in line with pillar 2 of the OECD’s tax overhaul plan.
An EU official told Tax Notes in February that cultural contribution requirements for streaming services under the Audiovisual Media Services Directive are not digital taxes because they aren’t funneled into member states’ budgets.
In February the Danish government said it planned to introduce a 5 percent tax on the revenues of streaming services providers. Poland and Portugal adopted similar taxes before the agreement on the OECD’s inclusive framework was reached.