Brussels, 1st June 2011

IMPALA calls for European VAT reform to boost the online market and stop discriminating against music

The EC is reviewing how its VAT system operates. Music should be at the very centre of the current debate, as highlighted in IMPALA’s response to the consultation.

Currently, some cultural goods are eligible for a reduced VAT rate, while others – such as recorded music – are not. Additionally, some cultural goods benefit from a reduced VAT rate offline, while the standard VAT rate is applied online.

The current situation creates confusion for both consumers and businesses and undermines Europe’s competitiveness.

IMPALA makes two proposals:

1. All cultural goods and services should be eligible for a reduced VAT rate within harmonised limits. At the very least, the discrimination between music and books should be removed.

2. There should be a VAT moratorium in the EU for online services to help European companies compete with the USA.

IMPALA believes this reform is vital for Europe’s cultural economy and its all-important online market. IMPALA also encourages others to add their own voice (see here)

Helen Smith, Executive Chair of IMPALA, commented: “In turbulent times for artists and the music sector, vital changes to the VAT system are needed, today more than ever.  Europe’s VAT system needs to be logical and serve true European values. ”

More information about the EC's VAT review
Following the release of its Green Paper on the future of VAT earlier this year, the European Commission invited all interested parties to submit their contributions in response to a consultation on the issue. The initial consultation deadline for responses was yesterday. This is the first leg of the process which aims to collate views and launch a debate on the current VAT system and possible ways to strengthen its coherence. The EC will now review next steps.

While VAT constitutes a major source of revenue for national budgets of the EU Member States, it suffers from numerous shortcomings, which do not make it fully efficient and compatible with the requirements of a true single market.

IMPALA was established in April 2000 to represent independent music companies. 99% of Europe’s music companies are SMEs. Known as the “independents”, they are world leaders in terms of innovation and discovering new music and artists - they produce more than 80% of all new releases. SME’s also produce 80% of Europe’s jobs. Their potential is enormous but is hampered by complex barriers to trade and severe market access problems. The impact on diversity, consumer choice and pluralism is clear. Over 95% of what most people hear and see, whether on radio, retail or the internet, is concentrated in the hands of four multinationals, known as the majors.
Cultural and creative SMEs are now officially recognised by the EU as “the drivers of growth, job creation and innovation”. IMPALA expects the EC and its member countries to put in place key investment, digital and market access measures. Fostering Europe's economy of culture and diversity is one of the EU's top priorities in becoming the world's leading knowledge economy. Culture is a bigger earner than any of chemicals, automobiles or ICT manufacturing and provides more than 3% of Europe's jobs. IMPALA has its own award schemes to help promote cultural diversity and new talent and highlight the artistic contribution of independent music. IMPALA award winning artists include Efterklang, Adele, Radiohead, Arctic Monkeys, Carla Bruni, Manu Chao, Corneille, Katie Melua, Franz Ferdinand, The Prodigy, Placebo and Ibrahim Ferrer (Buena Vista Social Club).
Please visit <> , contact IMPALA on or call +32 2 503 31 38