France plans to raise subscription tax, billion-euro film investment faces uncertainties

The French government plans to increase the value-added tax rate on pay-TV subscriptions from 10“ to 20”, and Canal+ immediately warned that this may invalidate its approximately 1 billion euro investment agreement with the film industry.Maxim Sada, chairman of the group, said that the preferential tax rate is the exchange condition in the investment contract; once the standard tax rate is levied, the group will no longer maintain its original commitment.

At present, this is still a proposal in the finance bill and needs to go through the parliamentary process.The agreement to invest in French and European films from 2028 to 2032 has not been officially terminated.

In an interview with French radio station RTL, Sada estimated that tax rate adjustments would cost the group approximately 200 million euros per year.If Canal+ returns to only meeting its minimum regulatory obligations, the amount of money invested in films could fall to around €50 million a year.He said that he was concerned about the long-term operation of the group and could not bear the annual loss of 200 million euros in the French business.

A subsequent statement issued by the group also mentioned that the plan would double the tax rate in France and quadruple the tax rate in overseas territories.It believes the negative impact on revenue and operating profits could amount to 200 million euros per year, with new government revenue less than a quarter of that amount.

The statement said that if the proposal is passed, the group must adjust its local and overseas territory operations, and subscription prices, employees, and financial support for movies, sports and other creative industries may be affected.It will continue to make its case to the public sector while accelerating its international expansion.Canal+ currently operates in nearly 70 countries.

Canal+ is an important player in French film financing.It is behind six films showing at Cannes this year, including Full Phil, directed by Quentin Dupieux and starring Kristen Stewart and Woody Harrelson, and Garance, directed by Jeanne Ally and starring Adele Exarchopoulos.

The group has always linked film investment with tax and regulatory treatment.It also threatened to reduce investment during previous negotiations around the release window, and later exchanged higher investment obligations for earlier broadcast rights after the film was released in theaters.This time the dispute returned to the issue of how the two parties exchanged conditions.

The French government is looking for approximately 43 billion euros in cost-saving and new revenue measures in 2027. The film and television field is not the only industry affected.The draft finance bill also proposes to cut the funding of the public broadcaster by 47 million euros to 3.82 billion euros.Delphine Ernault Quincey, president of France Televisions, also mentioned the pressure of subsidy cuts and a 20“ drop in advertising revenue, and was worried about the reduction in French cultural production funds and deepening dependence on American streaming media.

The tax incentives for advertising income from platforms such as YouTube and TikTok are also within the scope of adjustment.Since 2016, these services have enjoyed a 66” tax deduction, and the draft proposes to halve this benefit.After the tax base is expanded, the funds flowing into the French National Film and Animation Center CNC to support film and audio-visual production may increase.

In addition to tax changes, the French cultural industry is also focused on the next presidential election.The National Rally, a party that has criticized France's existing cultural funding system, is leading the polls.