The music industry’s long-running campaign for a lower value-added tax (VAT) rate on recorded music could benefit from a deal made Feb. 18 between France and Germany. At the invitation of French president Jacques Chirac, German chancellor Gerhard Schroeder lifted his veto on applying reduced VAT rates to restaurant services.
This concession from the German chancellor could pave the way for a re-assessment of the VAT dossier by the European Commission, according to lobby groups in Brussels. However, it is still far from certain that sound recordings could be added to the list of products and services that carry exemptions to the general rate.
The IFPI says the move could be positive for the industry’s campaign, but regional director for Europe Frances Moore says music should be higher than restaurants in the pecking order when it comes to a VAT cut.
“The bilateral decision taken by the German and French leaders to clear the way for a VAT reduction on restaurants will cost the tax payer much more than a VAT cut on sound recordings would do. Culture should not have to take second place to restaurants,” she says.
