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EC comes out against Spanish telco tax
By Julian Clover
Published: September 27, 2010 09.59 Europe/London

The European Commission will this week formally give the Spanish government two months to amend its controversial law on the financing of the public broadcaster RTVE. The Commission believes the so-called ‘Telco tax’, introduced to compensate the PSB for a loss in advertising revenues, to be illegal.A tax of 3% would be imposed on free-to-air commercial broadcasters and 1.5% on pay-TV broadcasters to help compensate RTVE for a loss of revenues from the withdrawal of advertising. In addition a 0.9% tax would be placed on electronic communications operators. RTVE would also be granted an 80% share in the existing radio spectrum levy, up to a maximum of €330 million.

In March, the telecommunications commissioner, Neelie Kroes, launched proceedings against Spain on the ground that such fees were not compatible with European legislation and that “appear to unduly affect telecom operators, and to limit their investments and penalised in final customers.” Subsequently, RTVE has been engaged in heavy lobbying of the Commission, and in June it appeared they had succeeded.

According to the European Commission, Spain is in violation of European telecommunications rules in trying to collect fees from operators not linked with the financing of administrative and regulatory costs but in order to compensate for the lack of advertising revenues.

If Spain does not amend its legislation within two months, the EU executive would take the case to the Court of Justice in Luxembourg.

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