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Netflix and VOD platforms will allocate 5% of revenues in Spain to European cinema

The Draft General Law of Audiovisual Communication has been presented by the Government to a public hearing starting the path of harmonization with the audiovisual communication services directive approved in 2018.

The future regulation, which will have to start its parliamentary procedure after the public hearing, aims to address the emergence of video-on-demand platforms such as Netflix, Prime Video, HBO or Disney + making them assume obligations similar to those that television networks already have.

The preliminary project increases the obligations of the platforms to equate them with private television channels, although they will not help finance RTVE

This adaptation of Spanish legislation to community regulations and its updating to the new reality of the audiovisual market establishes that these new actors established in Spain are subject to the same obligations as the rest. Those established outside the Spanish territory who direct services to the country will only have one obligation: to finance European audiovisual work.

From 50 million euros of turnover ... that could be audited

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The draft bill, which can be consulted through the public hearing website, indicates that it will be the providers with a turnover of more than 50 million euros per year generated by their services in Spain who "must allocate 5% of said income to financing European audiovisual work or to the contribution to the Film Protection Fund ".

Of this percentage, a minimum of 70% must go to projects by independent producers, while of this 70% a minimum of 40% must be used to finance films by independent producers in any of the official languages ​​of Spain.

If these platforms generate a turnover in Spain of less than 50 million euros per year, that 5% may go to both the financing of European audiovisual work or the Film Protection Fund as to the purchase of rights to finished European audiovisual work. And, again, a minimum of 70% of that money must go to independent productions.

Companies that are not based as such in Spain, even if they direct their services to the country, will only be obliged to contribute to European cinematography

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Providers with an annual turnover in Spain of less than 10 million euros will be exempt.

The thresholds established for the type of income are striking considering that the main platform of this type by popularity and estimation of users, Netflix, has declared in Spain through the two subsidiaries that it has established an income of 538,921 euros in 2018. With these numbers - which are far from the 5.5 billion euros entered the Netherlands, a country in which it declares 40% of world income - would avoid obligations.

The CNMC may require information from the platforms to know their real income in Spain and, thus, be able to enforce the obligations that correspond to them

However, Netflix, Prime Video, HBO, Disney + and other platforms will be obliged to register in a new registry of audiovisual service providers and, those that are registered, may receive requests from the CNMC authority to know their real income in Spain.

For the rest, the draft law also establishes for platforms established in Spain, not in third countries, at least 30% of European works in their catalogs with 50% of that percentage in Spanish languages ​​and does not enter into the financing of RTVE by these service providers, a matter that was on the table. Today, free-to-air television networks, pay channels and telecommunications operators help finance the corporation.