10 February There was a rather loud (although actually based on silence) media protest related to the "new tax" project. Both part of the television media, as well as some radio stations, did not broadcast, and instead displayed or read a message of disagreement with the above mentioned solution. What new "tax" are we talking about, and what is it exactly?
First of all, it is important to correct the important thing, which is not a tax. This is indicated by the title of the proposed law – "about additional revenues of the National Health Fund, the National Heritage Fund and the creation of the Cultural and National Heritage Fund in the Media Area" (hereinafter: Project).
In the Project itself, in Article 1, it is indicated that it lays down rules: 1) the collection and distribution of advertising contributions, 2) activities of the Culture and National Heritage Fund in the Media Area. This article will focus on the contribution itself.
Danina from conventional advertising and online advertising
According to the bill, contributions are collected for conventional advertising and online advertising. To be paid to the former according to Article 4 The bill's draft, obligations are media service providers, broadcasters, cinema operators, advertising entities on the external medium of advertising and publishers, obtaining revenue from the provision of services in the territory of the Republic of Poland:
- broadcasting advertising on television or radio, displaying advertising in cinema or placing advertising on the external medium of advertising beyond the amount 1,000,000 PLN,
- placing advertising in the press more than the amount 15,000,000 PLN.
Importantly, the obligation to pay this contribution arises when revenues of: 1,000,000 PLN for the broadcasting of advertising on television and radio, the display of advertising in cinema and the placing of advertising on the external medium of advertising, and 15,000,000 PLN for advertising in the press. It concerns revenue above the amounts previously indicated.
Grounds for calculating the contribution
The calculation of a given conventional advertising contribution is based on the sum of revenues (defined as ‘everything that constitutes payment for advertising services less tax on goods and services’) obtained in the calendar year from the source of revenue. The draft law lists revenue sources, i.e.:
- advertising on television, radio, cinema and external advertising media, except advertising on qualified goods (i.e., according to Article 7(3) Draft law, including dietary supplements and medical devices),
- advertising of qualified goods on television, radio, cinema and external advertising media,
- advertising in the press, with the exception of advertising of qualified goods in the press.
The bill also assumes differentiated contributions rates. Where these are advertising on television, radio, cinema and on an external advertising medium not involving qualified goods, the rates shall be respectively:
- 7.5% the basis for calculating the contribution — in part in which that base does not exceed the amount 50,000,000 PLN,
- 10% Surplus contribution base over amount 50,000,000 PLN – in the part where the basis for calculating the contribution exceeds the amount 50,000,000 PLN.
The premiums for the above types of advertising of qualified goods shall be as follows:
- 10% the basis for calculating the contribution — in part in which that base does not exceed the amount 50,000,000 PLN,
- 15% Surplus contribution base over amount 50,000,000 PLN – in the part where the basis for calculating the contribution exceeds the amount 50,000,000 PLN.
Advertising premiums in the press are different. For advertising of eligible goods, they shall be:
- 4% the basis for calculating the contribution — in part in which that base does not exceed the amount 30,000,000 PLN,
- 12% Surplus contribution base over amount 30,000,000 PLN – in the part where the basis for calculating the contribution exceeds the amount 30,000,000 PLN.
For other advertisements in the press, the contributions shall be:
- 2% the basis for calculating the contribution — in part in which that base does not exceed the amount 30,000,000 PLN,
- 6% Surplus contribution base over amount 30,000,000 PLN – in the part where the basis for calculating the contribution exceeds the amount 30,000,000 PLN.
Online advertising contributions
The issue of online advertising contributions is different. To begin with, it is worth determining what they are. They have been defined in the Draft Act as a digital service that allows the recipient to refer the advertising to the recipient, in particular by showing or reproducing in the form of sound or audiovisual material on the recipient's device. According to the Project, the referral of advertising to the recipient is dependent on data collected about the recipient, in particular:
- preferences of the recipient (current and anticipated) resulting from the advertising profile of the recipient - then we deal with profile advertising - or
- data arising directly from the action of the recipient – then it is context advertising.
However, this is not the end because according to Article 13(4) The draft law by Internet advertising shall also be understood to mean any other digital service relevant for directing advertising to the recipient, in particular:
- services leading to the creation of an advertising profile of the recipient, including analytical and traffic testing services of the recipient on telecommunications networks,
- data sales services,
- advertising auction services and access to advertising exchange mechanisms.
Who is the contributor to this contribution? According to Article 15(1) The draft act is a service provider who provides Internet advertising in the territory of the Republic of Poland, if the following conditions are met:
the revenues of the service provider or the consolidated revenues of the group of entities to which the service provider belongs, wherever they are achieved, exceed in the financial year the equivalent 750,000,000 EUR,
revenue of the service provider or consolidated revenues of the group of entities to which the service provider belongs for the provision of Internet advertising in the territory of the Republic of Poland exceeded the equivalent in the financial year 5,000,000 EUR.
The contribution from internet advertising is 5% the contribution base.
Revenue in a currency other than EUR shall be converted at the latest exchange rate published by the European Central Bank on the last day of the financial year.
How to check whether online advertising is provided in the territory of the Republic of Poland?
According to the Project, the above occurs when the recipient is in the territory of the Republic of Poland at the time of receiving the advertisement (i.e. especially when it is displayed or reproduced in the form of sound or audiovisual material).
The statement whether the recipient is in the territory of the Republic of Poland is, of course, made by determining the place of use of the device of the recipient, which can be determined by e.g. the IP address of the device, geolocation or address data resulting from payments, e.g. payment by payment card.
According to Article 18(1) The draft Act provides the basis for the contribution for Internet advertising to the total number of recipients of online advertising provided by the payer, regardless of where it is achieved, for online advertising and the percentage of the number of recipients, located in the territory of the Republic of Poland, in the total number of recipients of internet advertising provided by the payer, or a group of entities to which the payer belongs. If the amounts determining the contribution base are expressed in foreign currency, they shall be converted at the average rate of the foreign currency declared by the National Bank of Poland to the last working day preceding the day on which the contribution base is determined.
In conclusion, it is worth talking about the imposition of additional charges, especially if the proceeds are to be used for the right purpose. However, it seems to be quite controversial to impose the charge of the above contributions when private media also suffer the effects of the ongoing pandemic, especially smaller television and radio stations.
Michał Zdanowski, tax consultant at Russell Bedford Poland. Graduate of the Faculty of Law and Administration of the University of Warsaw, Graduate of the Postgraduate Tax and Tax Law Studies of the University of Warsaw, Graduate of the Postgraduate Accounting and Finance Studies of the Warsaw School of Economics. During his studies, he gained experience in law and tax law firms. Since September 2013 He is associated with Russell Bedford Poland. It specialises in documenting transactions between related parties.