European music should be recognised as a prime candidate for a reduced VAT rate

Brussels, 4th March, 2004

The European music sector has urged EU Member States to ensure that music is recognised as a prime candidate for reduced VAT rates during the current review of the 6th VAT Directive. VAT on sound recordings is currently set at between 15% and 25%, while other cultural products such as magazines, newspapers, books, entrance tickets to cinemas, theatres and concerts benefit from reduced rates upwards of 5%. All parties involved in the creation, production and retail of music have called for an end to this unjust discrimination against music, ahead of a meeting of EU Finance Ministers in Brussels on 9 March.

Following last month's bilateral agreement between France and Germany in support of lowering VAT on restaurant services, the music sector has urged Member States to take into account the realities of the cultural sector in general and recorded music in particular. Music is by definition a cultural product. It is logical that sound recordings should be added to the Annex H list of cultural products eligible for reduced rates during the current review of the 6th VAT Directive.

At present, there are significant differences in the VAT rates applied to sound recordings, ranging from 15% in Luxembourg to 25% in Denmark and Sweden. It is clear that this difference has not led to consumers travelling from Copenhagen to Luxembourg just to purchase CDs. Allowing Member States more flexibility to apply reduced VAT rates to sound recordings would not lead to any additional distortion of the Internal Market.

Entertainment retailers and record companies have given a public undertaking to maximise the benefits of a VAT reduction for European consumers, making the incredible diversity of European music more accessible for everybody. A VAT reduction would show that the EU is willing to do something positive for consumers and particularly for young people who have a close affinity with music. The VAT Coalition comprises representatives of authors, composers, music publishers, performing artists, artist managers, independent and major record companies, entertainment retailers and collecting societies. Their position has the backing of more than 1,300 European artists and composers who have signed petitions calling for a VAT reduction on sound recordings. In addition, over 140,000 EU consumers have signed petitions demanding a VAT cut on recorded music.

The VAT Coalition comprises:

EMO - European Music Office,
GERA-EUROPE, Global Entertainment Retail Association-Europe
GESAC, European Group of Societies of Authors and Composers
GIART, International Organisation of Performing Artists
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,
Mobile: +32 478 261995 , E-Mail: francine.cunningham@ifpi.org;
or Gabrielle Guallar, Impala, Tel +32 (0)2 289 26 00,
E-Mail: gguallar@kernnet.com