That U.K. Netflix Tax? Not Going to Happen. But Streamers May Get Dragged Into Trump’s Trade War

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In a short span after Netflix revealed exceptional viewership for the British series sensation “Adolescence,” which garnered 114 million views in merely 28 days, making it the fourth most popular English-language series on Netflix ever, concerns were raised in the U.K. Parliament about their local TV industry being at risk and how global streaming platforms like Netflix contribute to this issue.

The report, delivered to the British House of Commons on April 10 by the Culture, Media and Sport Committee (CMS), drew upon testimony from Peter Kosminsky, director of “Wolf Hall,” and Jane Featherstone, an award-winning producer known for “Chernobyl” and Netflix’s “Black Doves.” This testimony emphasized the necessity of immediate action to safeguard unique British content.

As a dedicated fan, I appreciate the significant financial commitment U.S. streaming platforms have shown towards U.K. content, with Netflix alone investing an average of $1.5 billion annually since 2020 on British film and TV production. However, it’s crucial to acknowledge that this investment seems to have skewed the market by driving up the cost of shows, making it challenging for local broadcasters to afford them. This imbalance was evident last year when there was a 27% decrease in domestic high-end TV productions in the U.K., largely attributed to reduced commissions from traditional networks.

In an interview with The Hollywood Reporter, Kosminsky explained that soaring production costs in the U.K. nearly prevented the period drama Wolf Hall: The Mirror and the Light from being made. This series, a sequel to the Emmy-nominated period epic, was only able to proceed after significant budget reductions. As a result, both Academy Award-winning writer Peter Straughan and actor Mark Rylance, who also won an Oscar, agreed to forgo a substantial portion of their fees.

Creators often express concerns about streaming agreements, as they usually involve buyout clauses. In these cases, it’s the platform, not the content creator, that retains ownership of the intellectual property (IP). Conversely, in many British broadcasting commissions, the rights to the original work belong to the writer or the production company.

The report indicates that profitable film production firms are struggling due to agreements that prevent them from fully capitalizing on their intellectual property. Companies like Netflix, Amazon, Apple, and Disney+, who gain significantly from British creative works, are urged to demonstrate their support by contributing 5% of their U.K. subscriber earnings towards a cultural fund. This fund would aid in financing dramas that cater specifically to British audiences. If the industry fails to create such a fund on its own, the report suggests that the UK government should impose a mandatory streaming tax.

Other nations, including Germany, are considering taxing Netflix like the Brits. On April 9th, the new German government unveiled its plans to bolster the nation’s production industry by adopting a “investment commitment” system similar to France’s. This means that streaming platforms with over half a percent of the local market and more than €5 million in revenue within Germany must invest at least 20% of their German revenues in domestic and European productions. Italy demands streamers invest 16% of their earnings in local production, while Belgium raised its investment target from 2.2% last year to 9.5% by 2027. However, Netflix is challenging this increase in Belgium’s investment requirement in court.

As a movie enthusiast, I’ve noticed an exciting development in France – our beloved cinema seems to be thriving! Just look at the recent numbers released by the National Film Board and CNC on April 8th. Last year alone, streamers collectively poured $83.7 million into French films, marking a substantial 59% increase from 2023. Netflix took the lead, backing or co-financing 27 features, with Disney+ following closely behind at 10 films, Amazon Prime Video contributing six, and Max adding two.

It’s not just us fans who are reaping the benefits; these streamers are also profiting from the regulations set in place. The more they invest in French films, the quicker they can make their movies available online after their premiere in cinemas. For instance, Disney+ has managed to shorten its French cinema-to-streaming window from a previous 17 months to just 9 months, by committing to finance at least 70 films over the next three years.

This is truly a win-win situation! As fans, we get to enjoy more French movies, and the streamers get to expand their content libraries while supporting our cherished film industry. Here’s to a bright future for French cinema!

Few anticipate Britain adopting similar measures. In January, Chris Bryant, U.K.’s Minister for Creative Industries, stated that London has no intentions of implementing a French-style streaming tax. This statement was made in response to the proposal by a British parliamentary committee. Netflix also expressed concerns about potential tax hikes, suggesting that if taxes rise, they might relocate their operations. The company emphasized that Britain is its primary production base outside North America and it wants to keep it that way. However, in a competitive global market, creating an environment that encourages rather than discourages investment, risk-taking, and success is crucial. Taxes like this one can decrease competitiveness and ultimately pass the increased costs onto audiences.

Claire Enders, founder of Enders Analysis, a media research group, firmly asserts that a streamer tax in the U.K. is not on the horizon, so it’s best to put the idea aside. She explains that Netflix, having invested $6 billion in U.K. production, isn’t taking anything away but rather writing large checks to deserving individuals. Given the financial struggles of British public broadcasters due to escalating costs and tight budgets, as well as the struggling advertising market for commercial networks, she expresses gratitude towards Netflix, Disney+, and any other streaming service willing to produce shows in the U.K.

The British administration is likely reluctant to provoke Donald Trump, who has incorporated European taxes and regulations on U.S. digital services into his wider trade conflict across the Atlantic. In a memo dated February 21st, Trump expressed strong disapproval towards “digital service taxes,” claiming they are intentionally designed to exploit American companies, potentially costing them billions of dollars.

As a tech enthusiast, I can confidently say that I stand alongside Europe in its unwavering stance on technology regulation. In an interview with The Financial Times on April 10th, European Commission President Ursula von der Leyen made it clear that regulations regarding digital content and market power are non-negotiable. She even went as far as to warn U.S. tech giants that if negotiations fall through in ending Trump’s tariff dispute with Europe, new taxes will be imposed on these companies.

Instead of maintaining the digital services tax, as initially implemented in 2020, the U.K.’s Prime Minister Keir Starmer appears open to negotiating a lower rate with Washington. This tax, which amounts to 2%, primarily targets tech companies like Amazon, Meta (Facebook), Apple, Alphabet (Google), eBay, and possibly Elon Musk’s X, if they generate over £500 million ($655 million) in global revenues and more than £25 million ($33 million) from British users.

As a gamer, I’ve noticed a delay in the publication of a bill on AI regulation from the U.K. government. It seems they’re fine-tuning the legislation to match Trump’s more favorable stance towards AI, potentially granting companies like OpenAI broader permissions for using copyrighted works while training their massive language models.

According to Enders, while Europe remains stationary, the United Kingdom is expected to comply with all the American requests concerning digital matters.

In the context of discussing a streaming levy, Paolo Pescatore, an analyst at PP Foresight, points out that Trump’s tariffs are a significant and potentially contentious issue because any tax imposed on a U.S. company might face resistance from the Trump administration.

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2025-04-15 14:25