07.08.2020

#devilinside – Some Ideas for Providing Effective Support for Culture

Author: Wiktor Rainka / Managing Partner

see #update

The links in the content refer to data, texts, or legal acts in Polish mentioned by the author throughout the article.

What’s the matter?

The inspiration came quite unexpectedly. Once, while checking LinkedIn, I came across an interesting post by attorney Xawery Konarski:

Regardless of its promises, the government eventually wants to introduce a tax on VOD services. It is inscribed in an amendment to the Cinematography Act (Polish: Ustawa o kinematografii)as part of the Anti-Crisis Shield 3.0 package. VOD providers are supposed to pay 1.5% of revenue achieved for access to the service and/or for commercials. This already seems to be a legislative trend since a new online sales tax was introduced last week in Hungary.

Then I found an article on a website of a Czyżewscy law firm specializing in audiovisual business. The text written by Paweł Kapelańczyk was entitled ‘The VOD tax appears on the horizon’ (Polish: ‘Podatek od VOD nabiera kształtów’). I found out that:

Article 15 of the above-mentioned Act introduces a provision into the Cinematography Act, according to which entities providing on-demand audiovisual media services, so, for instance, Netflix or HBO GO, will be obliged to pay a fee to the Polish Film Institute amounting to 1.5% of the revenue obtained either from fees collected for access to the streamed content or from the broadcast of commercials, if revenue from this source is higher in a given accounting period. In the case of entities which have registered their office in another EU country, the tax applies to the revenue obtained in Poland.

What do we know?

1) powstał rządowy projekt ustawy o zmianie niektórych ustaw w zakresie działań osłonowych w związku z rozprzestrzenian

1) There is a government bill that has been drafted to amend certain laws concerning ‘shielding activities’ launched in connection with the spread of the SARS-CoV-2 virus and they were dubbed with a film-and-digital-media-related nickname ‘Shield 3.0’;

2) The draft has not yet been adopted, but has only been proceeded today (28 April) to the first reading at the Sejm session;

3) the bill, which will have to be accepted by Sejm, Senate and by the President, assumes the VOD service providers’ obligation to pay fees to the Polish Film Institute in the amount:

1.5% of revenue coming from the following sources:

  • fees for access to content, namely:
    • the subscription fee(fee) for #SVOD e.g. Netflix or
    • pay-per-view(PPV) in the case of the so-called #PVOD
  • broadcasting commercials so that the tax includes #AVODs or #FVODs so those who stream the content not in return for the above-described methods of payment (fee, PPV) but for advertising revenue – in this way they will not lose the opportunity to support our culture🙂.

Is it a good idea?

At this point, we come across a problem and, at the same time, a conflict which has to be resolved by our legislator.

At first glance, the introduction of a fee for the Polish Film Institute to support Polish cinematography may seem like a good idea.

However, bearing in mind the rational objectives of the regulation in question and its anticipated effects, the way in which this idea is presented in the bill may raise some doubts.

VOD services:

  • can be provided from abroad. #AmazonPrime or #Netflix do not have their registered offices or branches in Poland yet. Nevertheless, we watch their productions on our screens, SmartTV, desktops, and mobile apps on our phones with great pleasure.

Such a large business can provide its services from across the ocean and does not have to be localizedin Poland at all. Yet, once it is, it is mainly due to investing in local audiovisual production. Can such a serious business be re-localized? The answer is probably affirmative.

Tajemnicą Poliszynela jest to, że zainstalowane u nas HBO GO czy wcześniej Indeed, it is an open secret that throughout the recent years, HBO GO or Showmax, the latter of which unfortunately is no longer available, have invested considerable resources in Polish film production and Polish culture in general. Without these platforms, we wouldn’t be able to enjoy such titles as Blinded by the Lights, The Pack (HBO GO), or The Mire (Showmax). The mentioned productions are those that support and promote Polish culture both within and across the country’s borders.

However, we cannot forget about the productions which were funded by the Polish VODs, such as Player.pl, Ipla and others, as well as productions that are an investment done by colleagues from across the ocean, such as the popular series, created based on the currently largest Polish export asset – The Witcher(A. Sapkowski / CD Projekt Red).

It is not easy to be a legislator, especially since the devil is inside – in the detail 🙂.