New legislative proposal on
VAT on rights made in haste

The government has just proposed a bill on VAT on the rights fees charged to providers of e.g. radio, TV and festivals.

The first reading of the proposal is already scheduled for later this month, and the tax minister plans for the bill to enter into force from 1 January 2025.

Rushing despite risk of major consequences

The great haste and the very short deadline is puzzling to the artists' spokesperson, Sara Indrio.

"It's almost bizarre to rush through a proposal that makes the supply of music and drama more expensive for consumers and the cultural food chain. The good news is that, after all, there is no VAT on the final stage, and thus for the artists, but what the practical consequences of the rest of the current proposal will be, we still need to clarify," she says.

No VAT on the individual artist

The proposal does not affect the individual artist, musician or performing artist. Artists will continue to be exempt from VAT when receiving rights revenue. It is only at the next stage, when others licence performers' work and rights, that VAT will be charged, according to the bill.

The proposal exempts artists because it is a smaller version of a previous bill on VAT on rights at all levels. It was taken off the table two years ago after solid arguments from, among others, the Danish Artist Association against imposing cumbersome VAT accounting on close to 100,000 Danish rights holders.

"Unfortunately, it seems that our current Minister of Taxation has grabbed at thin air to find some money in a rather random place, because we have the EU's word that it's up to Denmark to decide whether we want to put VAT on rights. It's a very radical and irrevocable change in the rights landscape set against a relatively small revenue," says Sara Indrio.

Politicians have listened to objections from both artists and the industry once before and dropped the proposal. Now the bill has been reintroduced, but in a version where artists are exempted after all. The reintroduction means that there is no consultation process for the bill.

Implications for smaller operators and festivals

Large public service media such as DR and TV2 already have an agreement on VAT compensation, so a VAT payment requirement will not affect their finances. However, the proposal seems to affect TV production companies, smaller players such as shops and non-profit organisations that disseminate music and culture, but which have so far been exempt from VAT on rights payments. According to the Ministry of Taxation, this could be providers such as festivals, non-profit organisations, TV production companies or non-commercial local radio stations.

It is resource-intensive to introduce VAT in an area that has not previously had VAT. The Danish Artist Association will investigate the long-term consequences of the proposal and is in dialogue with politicians and artist and management organisations about the bill and any comments.