Brussels, 14 December 2011

IMPALA calls for European VAT reform to stop discrimination against music

IMPALA calls on the European Commission and all member states to allow all cultural goods and services offline and online to benefit from reduced VAT.

IMPALA urges all interested parties to write in support (see here).

This follows the publication last week of a Communication by the European Commission on the future of VAT.

The European Commission is reviewing how the VAT system operates. Music should be at the very centre of the current debate.

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 believes a clearer VAT system would reduce business and consumer confusion, end the illogical discrimination between cultural products, reduce administrative burden on SMEs, boost access to culture and make Europe’s online market more competitive internationally.

IMPALA also supports the European Parliament’s call for a Europe-wide VAT exemption threshold for SMEs, which should be based on the existing schemes which are most beneficial to SMEs.

Helen Smith, Executive Chair of IMPALA, commented: “IMPALA renews its call to the European Commission and member states for equal VAT treatment of all cultural goods and services online and offline. The current situation, whereby cultural goods and services are not subject to the same VAT rate, is illogical, discriminatory and harmful to Europe’s economy.”

More information about the EC's Communication on the future of VAT
After carrying out a consultation on VAT earlier this year, the European Commission published a Communication on 6 December setting out the features of a future VAT system and listing the priority areas for further action in the coming years.

In the Communication, the Commission recognises as a guiding principle that “similar goods and services should be subject to the same VAT rate and progress in technology should be taken into account in this respect, so that the challenge of convergence between the on-line and the physical environment is addressed”.

The European Commission will launch an assessment of the current VAT rates structure in 2012 and will subsequently make proposals by the end of 2013 after further consultation with stakeholders and member states.

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, Manu Chao, Radiohead, Agnes Obel, Caro Emerald and Sigur Ros.

Please visit <>, contact IMPALA on or call +32 2 503 31 38