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The digital fee in force since July 1, 2020

Significant changes were introduced to the Cinematography Act as part of the Anti-crisis shield 3.0. The newly added paragraphs concern the obligation to pay a fee to the Polish Film Institute by entities providing audiovisual media service on demand (VOD) from July 1, 2020.

The fee will be charged quarterly, it must be paid within 30 days after the end of the quarter. Its rate is 1.5% of the revenue obtained from fees for access to publicly available audiovisual media services on demand or the revenue obtained from commercial content, if this revenue in a given accounting period is higher.

For entities having their registered office in another member state of the European Union, the basis for calculating the fee will be the amount of income generated in the Republic of Poland.

The fee is understood as tax deductible and can be deducted on the date it is incurred.

The amended wording of the Cinematography Act contains significant exclusions to the obligation to pay this fee. The digital fee does not apply to micro-enterprises within the meaning of the Law on Entrepreneurs and entities in which the number of users of all audiovisual media services made available to the public by a given entity on demand in the year preceding the year in which the obligation to pay for the Institute is set, does not exceed 1% of service subscribers data transmission ensuring broadband Internet access.

Repeal of article 19 paragraph 6 of the Cinematography Act means that in the version in force from 1 July 2020, each entity from the group running VOD, television or cinema will have to pay the fee separately. Until now, it was possible to pay the fee once by the capital group (controlling entity) and to deduct from it the fees paid by the controlled entity in a given settlement period. Currently, there is no similar mechanism. This creates the danger that a double tribute will be charged on the same activity, both at the level of the capital group and a single entity.

In the case of digital fee, Section III of the Tax Code applies, regulating the issue of tax liabilities. The tax authority for the purposes of this fee is the Director of the Tax Administration Chamber, and the appeal body is the minister competent for public finance.

It can be expected that the fee described above is not the last word of the Polish legislator when it comes to charging digital services. It should be noted that the introduction of the digital fee itself took place even before reaching a consensus on this topic at European level, despite initial announcements that legislative steps at national level would be introduced only after unanimous agreements of the member countries of the European Union.

In the justification of the change, we read that it is a form of support for Polish cinema in the face of a pandemic and reduced revenues because of it. Attention is drawn, however, to the fact that the fee was imposed for an unlimited period, and not only for the duration of the state of epidemic emergency.

Extension of the current regulations on the digital fee is expected, as well as modification of national legislation in order to bring it into line with EU guidelines, that we are still awaiting. Advicero Nexia offers entities covered by the newly introduced fee a wide range of services consisting of verification of the emergence of the obligation to pay, determining its amount and representation before tax authorities in the field of new regulations. In case of any doubts, feel free to contact us