Denmark set to overhaul 6% streaming levy as production industry looks to recover

Borgen

Denmark’s controversial bill that would have seen streamers paying a 6% levy on local revenues is set to be reworked, with spending on local language content among alternative measures on the cards.

The move comes just days after the country voted in a new coalition government, with the centre-left Social Democrats, the centre-right Liberal parties and the centrist Moderate party agreeing to work together.

Social Democrat PM Mette Frederiksen, who called the election in October, remains in charge and her coalition has now confirmed a raft of new measures, including “exploring” changes to the Media Agreement.

Context & changes

Denmark’s ailing production sector has all but ground to a halt over the past year, as a stand-off about payments between streamers and actor-director union Create Denmark saw almost all shows in development and production left in limbo.

Compounding this was a plan for a 6% levy on streamer revenues, which the previous Danish government had looked to introduce but which many production groups said would hit local commissions.

However, the new coalition has said that while it will implement much of the Media Agreement struck in May, it would “explore the possibility of replacing the cultural contribution” scheme.

The government said in its Foundation statement that it would “explore the possibility of changing the Cultural Contribution to a model whereby the streaming services can choose between an obligation to invest in Danish-language content or pay a levy – as well as making further adjustments.”

Uncertainty remains

Local sources tell TBI that it remains to be seen how the changes will be implemented, partly because several parties that had voted for the Media Agreement in May are now not part of the coalition. That could mean the entire agreement has to be scrapped and started “from scratch,” as one local producer put it.

“On the other hand, the coalition government is now a good red-blue mixture, including a blue minister of culture with a solid business back ground, so I am optimistic that they will do what is clearly much better for the competitiveness of the Danish film industry – a mixed small levy/investment obligation,” the producer added.

Denmark has become something of a test case for other countries across Europe looking to tax streamers, but the country is not alone in looking to issue a levy – Germany charges up to 2.5%, while France and Spain are both implementing levies of 5%.

However, local producers said that the 6% charge, combined with the strength of the Krone, the Create Denmark dispute and the softening in demand for local original programming from global streamers, would cause long-term damage to the country’s production sector.

Denmark had previously required streamers to invest 2% of their Danish turnover in local content, before introducing plans for the 6% levy this year.

That, combined with the stand-off between Create Denmark and streamers, saw the country’s production industry grind to a standstill at a cost of up to $200m, according to some estimates.

While Netflix and Viaplay have now agreed to a new payment framework with Create Denmark, more than 50 shows were stopped at either development or production stage, leaving many production companies nursing heavy losses.