Danish Act on Cultural Contribution now enacted after second round and some adjustments following the EU Commission’s comments
On 19 December 2023 the Danish Parliament passed a bill on Certain Media Service Providers’ Contribution to Promote Danish Culture (the Act on Cultural Contribution). However, due to a procedural irregularity, the EU Commission had not been notified of the legislation in time, and the bill therefore did not receive the Royal Assent, and the legislative process had to be repeated.
Consequently, a bill for the Act on Cultural Contribution was sent for public hearing in a second round with deadline 1 March 2024, presented in Parliament on 12 April, presented to the EU Commission that gave their comments on 2 May, adjusted to comply with the comments, treated again in Parliament, and finally passed on 30 May by the Parliament.
The purpose of the Act is to introduce an obligation for VOD service providers to pay a cultural contribution to promote Danish culture.
According to the Act, providers of on-demand audiovisual media services must make an annual payment to the Danish state of 2% of their turnover in Denmark stemming from the on-demand service and an additional 3% if the provider's investment in new Danish content is below 5%.
An investment is regarded to be in Danish content when 75% of the production material for films, series and documentaries produced in Europe is in Danish - and more than 50% of the production budget is spent in Denmark or more than 50% of the production recordings take place physically in Denmark. The EU Commission found these last territorial demands problematic in relation to the free exchange of services in the internal market. Therefore, the territorial demands were removed from the bill in May before enactment.
Thus the demands as to where the production budget should be spent and where the production should take place were left out.
The EU Commission also criticized the demand of 75% Danish production material and the demand that investment should be in “new” content, but this was not changed in the bill.
According to the Danish Ministry of Culture’s evaluation, the cultural contribution is not illegal state aid under TEUF article 107(1), but the bill for the Act on Cultural Contribution was nevertheless notified to the EU Commission to obtain the Commission's consent in that regard.
Thus the EU Commission has not formally accepted the Danish Act on Cultural Contribution in its present form - which the Danish Minister for Culture referred to as an inherent risk in his letter to the Parliament Culture Committee before enactment – but, as mentioned, the Act on Cultural Contribution was passed by the Parliament on 30 May.
In the hearing answers and in the media many expressed the opinion that it is not suitable – and constitutes retrospective legislation - when payment of cultural contribution has to be made for the turnover in the whole year 2024, i.e. back to 1 January 2024, when the Act does not enter into force until 1 July 2024. But this was not changed, as the Danish Ministry of Culture found that the encompassed media service providers had had sufficient time and opportunity to adapt to the new rules, both via the legislative process in 2023 and the Ministry’s communication regarding the second round of the legislative process in preparation for enactment in 2024.
The nett proceeds of the contributions are expected to be divided with 20% to support public-service purposes (documentaries and series) and 80% to film-funding purposes (feature productions and series), to be decided finally when the proceeds are known. Media service providers that pay the contribution may subsequently apply for funding for production of new Danish audiovisual content from these national aid schemes.
The Danish Ministry of Culture assessed, conservatively - before the territorial demands had been left out as described above - that the cultural contribution in total will amount to about DKK 98 million (EUR 13 million) annually. It is not known what impact these amendments will have on the cultural contribution yield.
References:
- Act on Certain Media Service Providers’ Contribution to Promote Danish Culture (the Act on Cultural Contribution) [Lov om visse medietjenesterudbyderes bidrag til fremme af dansk kultur (kulturbidragsloven)] as passed by the Parliament on 19 December 2023 (in Danish): https://www.ft.dk/ripdf/samling/20231/lovforslag/l70/20231_l70_som_vedtaget.pdf
- Public consultation on adjusted parts of the Act, with deadline 1 March 2024 (in Danish): https://hoeringsportalen.dk/Hearing/Details/68375
- Bill for Act on Cultural Contribution, as introduced in Parliament on 12 April 2024 (with explanatory notes, in Danish): https://www.ft.dk/ripdf/samling/20231/lovforslag/l159/20231_l159_som_fremsat.pdf
- 2 May 2024 comments from the EU Commission (in Danish): https://www.ft.dk/samling/20231/lovforslag/L159/spm/4/svar/2050451/2870353.pdf
- 25 May 2024 letter from the Danish Minister for Culture to the Parliament Culture Committee about the EU Commission’s comments, and state aid (in Danish): https://www.ft.dk/samling/20231/lovforslag/L159/bilag/11/2873425.pdf
- Revised bill for Act on Cultural Contribution, after Parliamentary treatment 28 May 2024 (in Danish): https://www.ft.dk/ripdf/samling/20231/lovforslag/l159/20231_l159_efter_2behandling.pdf
- Act on Cultural Contribution, as enacted 30 May 2024: https://www.ft.dk/ripdf/samling/20231/lovforslag/l159/20231_l159_som_vedtaget.pdf
4 June 2024
Terese Foged
(This article was published in IRIS Newsletter (European Audiovisual Observatory, under the European Council)
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