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Denmark Considers Implementing a Digital Streaming Services Tax

Oct. 18, 2022, 7:00 AM

Currently, Denmark does not impose digital service taxes on digital streaming, on-demand services or similar. However, on Aug. 15, 2022, the Danish Minister of Culture published a draft bill introducing a cultural levy on the turnover generated by Danish and EU-based digital streaming and on-demand platforms and services in Denmark.

The draft bill is part of a political agreement between the current Danish government and its supporting parties concerning the Danish media sector for the period 2022-2025 (the media agreement), which was announced on May 21, 2022.

The draft bill is Denmark’s implementation of the EU’s Audiovisual Media Services Directive (AVMSD), which allows for each EU member state to impose financial obligations on EU established media service providers who target audience in their jurisdiction.

The draft bill has been subject to public consultation that ended on Sept. 12, 2022, after which it is expected to be presented to the Danish parliament in October 2022. No official hearing responses have been published yet.

The political aim of the proposed bill is to strengthen the production of Danish fiction series, documentary programs, and films, and thereby support the supply of Danish content by introducing an obligation for on-demand audiovisual media service providers to contribute to the cultural funding of Danish national content.

The Proposed Cultural Levy

The draft bill proposes to introduce the cultural levy collected from digital streaming platforms and on-demand streaming services aimed at a Danish audience. The obligation to collect the levy will apply to digital streaming platforms and on-demand service providers established in Denmark or in another EU member state, according to the AVMSD (see article 2(3)), which includes media service providers that have their head office in an EU member state and where the editorial decisions about the audiovisual media service are made in the same or another EU member state.

If a media service provider has its head office in an EU member state but decisions on the audiovisual media service are made in a country outside the EU, or vice versa, the platform is deemed to be established in the EU member state, provided that a significant part of the workforce involved in the pursuit of the audiovisual media service activity operates in that EU member state.

The levy is proposed to be calculated as 6% of the on-demand audiovisual media service provider’s gross revenue in Denmark arising from the provider’s availability of on-demand audiovisual media supply of films, fictional series, and documentary programs, including subscription revenue, transaction or rental revenue, advertising revenue and revenue from resale of on-demand audiovisual media services in other companies’ subscription-based products.

The cultural levy will only apply to on-demand media service providers that have an annual turnover of more than 15 million Danish krone ($1.95 million). Only on-demand content is encompassed and, in the case of mixed services, the contribution relates only to the on-demand content, not the linear content that includes integrated catch up as part of the linear service. Accordingly, continuous streaming of predetermined programs—i.e., “Flow TV"—is excluded from the draft bill. The on-demand media services offered by the public service companies according to Section 11 of the Danish Radio and Television Broadcasting Act, which includes DR and the regional TV 2 stations, are exempt from the cultural levy.

According to the draft bill, the annual turnover (with a statement from an independent auditor) must be reported to the Agency for Culture and Palaces, which is under the Danish Ministry of Culture, on an annual basis, for the agency to decide the turnover liable to contribution and charge the media service provider for the cultural contribution. Further detailed rules and requirements on the reporting can be instituted by the Minister of Culture.

According to the preparatory works of the draft bill, the proceeds from the cultural contribution scheme will be divided equally between two pools: a public service pool and a pool for Danish film funding, to which the on-demand media service providers that pay a cultural contribution can apply for funding of new Danish-language audiovisual content.

The proposed bill is envisaged to enter into force on Jan. 1, 2023, which allows the Agency for Culture and Palaces to charge the cultural contribution for the first time in 2024 based on turnover subject to contribution during 2023.

Financial Consequences of the Proposed Cultural Contribution

The Danish Ministry of Culture believes that the cultural contribution scheme will encompass up to 50 media service providers that will contribute approximately 180 million Danish krone a year. The cultural contribution is, with considerable uncertainty, estimated to result in proceeds of approximately 170 million Danish krone in contributions, which will be split equally between the public service pool and the pool for Danish film funding, while 10 million Danish krone will be allocated to cover an expected overall loss in tax revenue in the state budget caused by the proposed scheme.

It is assumed that the levy can be deducted for Danish corporate income tax purposes when calculating the taxable income for entities subject to tax in Denmark. The tax value of such deduction is generally 22% (corresponding to the standard Danish corporate income tax rate).

Responses to the Draft Bill

While no official responses to the hearing have been published yet, the unofficial responses to the draft bill have been mixed.

Public funding bodies have voiced positive reactions to the draft bill, seeing the levy as a strengthening of democratic control of tech giants and an enabling factor to future production of quality Danish films and series on more sustainable terms. According to the positive respondents, the existing funding system has proved to be a guarantee for producing diverse Danish quality content, which sustains the relevance of Danish films for Danish audiences, and the international recognition of Danish films.

The streaming service providers have had highly negative responses to the levy as proposed in the draft bill. They view the levy as an unnecessary and misguided government intervention aiming at preserving the production of Danish content while having the opposite effect, arguing that the levy could motivate streaming service providers to redirect investment to financially more attractive markets. The streaming service providers are of the view that the levy ultimately will lead to less investment in Danish TV content and to higher consumer prices, which is the opposite of what the Danish government should be aiming for when the demand for Danish film and content is higher than ever.

The draft bill and the responses from the streaming service providers comes on top of the streaming providers’ dispute with the unions representing Danish writers, actors, and directors, among others, over on-demand rights payment, which has already resulted in complete suspension of productions in Denmark by, among others, Netflix, Viaplay, and TV2 Play.

Uncertainty of the Levy as Proposed

On Oct. 5, 2022, the Danish prime minister announced an election ahead of time due to increasing pressure and heightened criticism of the current government. The election is scheduled to be held on Nov. 1, 2022.

The announcement of an election ahead of time has resulted in legislative work being put on hold by the parliament, risking large parts of the narrowly supported media agreement, including the introduction of the cultural contribution being delayed, or even dropped completely, due to the lack of support by the newly formed Danish parliament.

Further, an agreement was reached by the Organisation for Economic Cooperation and Development on Oct. 8, 2021, to remove all unilateral digital services taxes and other relevant similar measures. The Danish Ministry of Taxation has assessed that the proposed cultural levy should not conflict with the OECD agreement, but it is explicitly stated in the preparatory works of the draft bill that it is the intention that the proposed levy should follow the OECD agreement. Consequently, should the proposed levy not be in line with Denmark’s obligations according to the OECD agreement, it is understood that the bill and levy should be revised according to the OECD agreement.

This article does not necessarily reflect the opinion of The Bureau of National Affairs, Inc., the publisher of Bloomberg Law and Bloomberg Tax, or its owners.

Author Information

Poul Erik Lytken is a partner and Gluay Dam is an attorney with Accura Law Firm.

The authors may be contacted at:;