Music organisations join forces to call for a VAT reduction on sound recordings

December 2nd, Brussels

The music sector called on the European Union to reduce VAT on CDs, ahead of a meeting of EU Finance Ministers in Brussels tomorrow. Music professionals and creators have joined forces to condemn the blatant cultural discrimination against music that sets VAT on sound recordings as high as 25 per cent while other cultural goods have rates upwards of 5 per cent.

Appreciation of music is deeply rooted in European society and music is the main way that many people, particularly the youth, experience EU culture. However, this is not reflected in EU tax policy. Recorded music is unfairly treated in comparison to other cultural products and services that currently benefit from reduced VAT rates such as books, magazines, cartoons, entrance tickets to cinemas, museums and zoos.

VAT rates on CDs in the European Union currently range from 25% in Denmark and Sweden to 15% in Luxembourg.

A VAT Coalition* representing authors, composers, music publishers, collecting societies, artist managers and entertainment retailers as well as independent and major record companies, is calling for a VAT reduction that would help revitalise the entire European music market. The music sector is currently fighting back against an epidemic of piracy that is undermining creativity, costing thousands of jobs and threatening investment in new talent.

At a press briefing in Brussels, the VAT Coalition launched its campaign to "Give Music a Break" and a joint brochure. The Coalition outlined the positive impact that a reduced VAT rate on CDs would have on the future development and diversity of European music. It stressed that the benefits of a VAT reduction would be maximised for European consumers, making music more accessible for everybody.

Njara Zafimehy, GERA-Europe President, said: "A reduction of VAT on sound recordings will make CDs more attractive for consumers, as any reduction of VAT would offer a possibility of lowering the cost of a CD."

The VAT Coalition urged the European Commission to propose a reduction of the VAT rate on recorded music as the EU prepares to revise the 6th VAT Directive in the first half of 2003. To achieve a reduced rate, sound recordings would have to be added to Annex H of the VAT Directive, which lists all cultural goods and services benefiting from a reduced rate.

Introducing a reduced rate of VAT would be an option for Member States, if CDs are added to Annex H. However, unless sound recordings are listed in the Annex, the governments that wish to cut VAT on recorded music will not have the option to do this in their own country.

A number of EU governments have already expressed the wish to treat sound recordings as cultural goods from a VAT viewpoint. The European Parliament also recommended a reduced rate of VAT on cultural goods and services earlier this year.

Organisations from across the music sector welcomed the French government's recent appointment of the former French Minister of Culture, Mr François Léotard, to campaign for a VAT reduction on sound recordings.

*The VAT Coalition comprises:

EMO - European Music Office,
GERA-EUROPE, Global Entertainment Retail Association-Europe
GESAC, European Group of Societies of Authors and Composers
ICMP/CIEM, International Confederation of Music Publishers
IFPI, Representing the recording industry worldwide
IMMF, International Music Managers Forum
IMPA, International Music Publishers Association
IMPALA, Independent Music Companies Association

For further information, please contact:
Francine Cunningham, IFPI, Tel: +32 (0)2 511 92 08, francine.cunningham@ifpi.org;
or Gabrielle Guallar, Impala, Tel +32 (0)2 289 26 00, gguallar@kernnet.com