Canal+ Calls VAT Hike “A Direct Attack” On Its Operations In France As Guilds Protest Move

Paris-based pay-TV giant Canal+ has hit back at the French government’s plan to double the VAT rate on TV subscriptions from 10% to 20% saying it could leave a potential €200M ($225M) hole in its finances.

The planned hike was confirmed in a draft budget plan for 2027 presented by Prime Minister Sébastien Lecornu on Thursday.

The controversial package aimed at reining in France’s public debt, with the government says is poised to hit a record 121.7% of domestic product (GDP) in 2027, proposes some €43B ($48B) worth of “recovery measures” which include increasing revenue from VAT.

In a separate development, the budget plan also includes a proposal to cut to a tax deduction for YouTube, YouTube, TikTok, Facebook and Instagram linked to payments they make to France’s National Cinema Centre (CNC).

These platforms were integrated in 2016 into France’s virtuous system of obligations, under which all entities distributing content in the territory are required to pay a percentage of their local revenue to the CNC, which is then put back into the local film and TV industry. Up until now, the obligation was based on around 35% of their advertising revenues thanks to 66% “abatement” but this has been halved. The measure is expected to raise around €60M ($60M)

Canal+ reaction

Canal+ called the decision to double the VAT rate for TV subscriptions “inconsistent” and “ill-advised”, noting that the government had only just last year confirmed that the 10% rate would stay in place.

“If adopted, this measure would have a massive negative impact on the Group’s revenue and operating margin, potentially reaching €200 million annually, while the revenue gain for the State would amount to less than a quarter of that figure,” read a statement from the pay-TV giant.

“Canal+ would be unable to absorb such a loss in France and would consequently be forced to adjust its operations in mainland France and the Overseas Territories. This would inevitably impact subscription prices, workforce levels, and financial contributions to the film and sports ecosystems—and the creative sector more broadly. The film and rugby communities have already rightly raised alarms regarding the risks this measure poses to the future of their respective industries.”

Canal+, which floated on the London Stock Exchange in 2024 as part of a restructuring by Vivendi and has also expanded its footprint in Africa with the acquisition of the MultiChoice Group last year, said the VAT hike in France would lead it to double down on its international activities.

“With operations now spanning nearly 70 countries, Canal+ regrets this direct attack on its business in its home market of France; it will draw the necessary conclusions and accelerate its international expansion strategy,” said the pay-TV.

Industry reaction

Rumors of the proposed VAT regime change for Canal+ had already sparked alarm bells with the French film and TV sectors earlier this week.

Canal+ is one of the France’s major backers of local and European films and series. In July, it pledged more than $1 billion (€980 million) for French and European cinema over five years in a fresh deal with the country’s main producer groups.

It followed a previous accord in which Canal+ invested €480 million in French and European films from January 1, 2025 to December 31, 2027.

News of the tax hike for Canal+ also follows in the wake of news that the government was also planning a €47M ($53M) cut in public funds for state broadcaster France Télévisions in 2027.

Pre-empting the confirmation of the Canal+ VAT hike, France’s film and TV guilds put out a statement earlier this week. Bannered “Who wants the skin of French film and TV”, it declared that the Canal+ VAT hike combined with the France Télévisions cut flew in the face of promises made by President Emmanuel Macron at his Lumière Summit in September.

“That summit…. had the stated aim of placing France at the heart of global creative production,” it read. “France Télévisions and Canal+ are two pillars of French film and audiovisual financing.

“Through their investment obligations, pre-buys, and commitments under the media chronology rules, they enable hundreds of projects to get off the ground each year, ranging from debut features and auteur-driven works to genre films and international co-productions. Cutting their resources inevitably reduces their capacity to invest in creative work. Since funding obligations are tied to revenue, every euro taken away from these groups translates into fewer funded projects, fewer shoots, fewer jobs, and less diversity on screen. Targeting both groups in the same budget means striking at the very heart of the French model.