As the French government prepares its 2027 budget, CANAL+ issued a public notice opposing a proposed VAT increase on pay-TV subscriptions from 10% to 20% in mainland France and a quadrupling in the overseas territories. The company argues that the proposal is unjustified and inconsistent, particularly because the French Tax Authorities confirmed its eligibility for the 10% rate less than a year ago.
Impact of the VAT Rate Increase
The impact of this measure should be viewed from several perspectives: CANAL+, the government, consumers, workers, and the broader film industry. According to CANAL+, the proposed increase would significantly affect its finances, potentially reducing revenue and operating margin by up to EUR 200 million annually. The additional tax revenue for the government, however, would amount to less than a quarter of that sum.
CANAL+ argues that it could not absorb these costs without making substantial adjustments to its French operations, potentially leading to higher subscription prices, workforce reductions, and lower financial contributions to the film, sports, and wider creative industries.
The company also warns that the VAT measure could harm France’s cultural and entertainment sectors, confirming concerns already raised by the film and rugby industries. As CANAL+ expands its operations internationally, it views the proposal as a direct attack on its activities in its historic home market. Furthermore, the TV giant says the rise of the applicable VAT rate may accelerate its international expansion strategy in response.
Notably, in its public notice, CANAL+ stated that it intends to challenge the proposal before the French authorities, arguing that the tax increase threatens its subscribers, employees, business partners, and the French and European cultural industries.
Conclusion
The proposed VAT increase poses significant financial and operational challenges for CANAL+, threatening to drive up subscription costs and curb domestic investment. Ultimately, such a measure risks undermining the financial stability of France's broader cultural and creative ecosystem while accelerating CANAL+'s pivot toward international markets.
