On 19 December 2023, the Danish parliament passed Bill No. L 70 introducing a cultural levy on on-demand audiovisual media service providers. The law is applicable from 1 January 2024, and the first payment of the cultural levy must be made in 2025 based on the turnover in 2024.

The base for the cultural levy will be the revenues generated in Denmark. A basic rate of 2% of the Danish revenues will apply to all on-demand streaming companies. A 3% surcharge will apply to companies that invest less than 5% of their Danish revenues in Danish content (i.e., the total rate will be 5%).

The relevant revenues are limited to gross revenues from Denmark stemming from the provision of on-demand audiovisual media services. Excluded are revenues from sports and news channels, flow television¹ channels, as well as pure distribution of other media service providers, provided that the distributor has no editorial responsibility.

The law is applicable irrespective of which business concept the service provider applies. For example, the law applies to business concepts such as subscription video on demand (SVOD), transactional video on demand (TVOD) and combinations thereof. Service providers that solely offer audio on-demand services fall outside of the scope of the law.

The law only applies to service providers established in Denmark and service providers established in another EU member state that services a target audience in Denmark. Among other things, services will be deemed to target an audience in Denmark if the services include advertising or other promotion measures that specifically target an audience in Denmark, the main language is Danish, or the content or commercial communication specifically targets an audience in Denmark.

A service provider is deemed to be established in an EU member state if its headquarters is in that member state and editorial decisions are made in that member state. If a service provider has its headquarters in a member state, but editorial decisions are made in a third country, or vice versa, the service provider will be deemed to be established in the member state if a substantial number of employees engaged in the audio-visual business work in that member state.

The scope of the law is subject to the following carveouts:

• The law is not applicable to service providers with an annual total turnover of less than 15 million Danish Krone (DKK15m) or with a small Danish audience (less than 1% of the total number of subscriptions on the Danish market). The turnover must include the turnover of partnering enterprises and associated enterprises.
• The law is not applicable to on-demand audiovisual streaming services that are offered in connection with the performance of public service activities under section 11 of the Danish law on radio and television activities or offered in connection with the regulations in the other EU member state where the service provider is established.

The revenues from the new levy will be used to finance the production of Danish movies, fiction series and documentaries. The timing of the introduction of the new levy is currently uncertain.

According to the government, the cultural levy observes the Audiovisual Media Services Directive (EU 2018/1808) and the Organisation for Economic Co-operation and Development (OECD) rules on taxation of the digital economy (base erosion and profit shifting (BEPS)).

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For additional information with respect to this Alert, please contact the following:

EY Denmark, Copenhagen

• Jens Wittendorff | jens.wittendorff@dk.ey.com

EY Denmark, Aarhus

• Søren Næsborg Jensen | søren.n.jensen@dk.ey.com

Published by NTD’s Tax Technical Knowledge Services group; Carolyn Wright, legal editor

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ENDNOTE

¹ Flow television refers to traditional television, displaying a set schedule of programs for the entire day, opposed to streaming TV that allows viewers to choose what to watch.