National Assembly approves VAT rise on triple-play

25 Oct 2010

France’s National Assembly has passed a measure to increase value added tax (VAT) on triple-play bundles of TV, broadband internet access and telephony, Le Parisien reports. Last month, TeleGeography’s CommsUpdate reported that France’s Economy Ministry was preparing to submit proposals to the country’s president, Nicolas Sarkozy, concerning a plan to raise the VAT on telecom bundles, following pressure from EU regulators to amend the way it taxes triple-play services. Operators will now be required to pay VAT of 19.6% on the full amount of triple-play service revenues as part of the 2011 budget, compared to the current rate of 5.5% on the TV service – argued by France as comprising 50% of the triple-play bundle – which allegedly contravenes EU rules on VAT. In March this year Brussels informed the French authorities that the system was problematic and requested an explanation on the thinking behind it. In light of this, the country has harmonised its position by moving towards a VAT rate of 19.6% on the entire bundle. End-users are expected to see the cost of triple-play subscriptions rise by around EUR2 (USD2.8) per month on a bill currently less than EUR30. In total, the state expects to raise more than EUR1 billion in state revenues through the measure.