France rules ad tax illegal but CNC avoids payback

France’s Centre National du Cinéma et de l’Image Animée (CNC), which dispenses public support for content creation in the country, has avoided having to pay back over €500 million to commercial channels’ advertising arms after the constitutional court ruled that a tax on advertising revenues to support content was unconstitutional.

The Conseil Constitutionnel ruled that the tax, which has been levied since the dawn ofcommercial broadcasting in France in 1984, was unlawful. However it gave the government until the middle of next year to modify it, avoiding funds levied through the tax being reimbursed to the channels.

The court was ruling on a case brought before the Conseil d’Etat in July by EDI TV, the advertising arm of commercial broadcaster M6. Commercial channels had called for a total of €509 million to be reimbursed, a colossal amount for the CNC. The tax brings the organisation about €290 million a year.

The case hinged on the fact that advertising revenues accrue to companies affiliated with broadcasters rather than the broadcasters themselves.

The ruling means that the French parliament now has time to amend the tax to make it lawful and protects the CNC from a financial cliff edge through the need to reimburse the broadcasters.

“This action by the commercial channels could have meant a very serious attack on the overall system of financing content creation that is the basis of the French ‘cultural exception’, even though these supports have financed, for over 30 years, all the French content that these channels distribute and are crucial for the variety and quality of their programmes,” said Frédérique Bredin, president of the CNC.

French content creators and rights collection groups also welcomed the court’s decision to give the parliament time to amend the tax, describing it as “wise” and noting that it avoided the immediate risk of “a destabilisation of policy for the support of audiovisual content, the cinema and digital creation”.

The ARP, the Guilde des Scénaristes, Group 25 Images, the SACD, the SCAM, the SCA and the SRF called on the government to take urgent measures to amend and secure for the future the funds made available by the tax on advertising revenues and to secure the funds already received by the CNC.