Music sector welcomes inclusion of sound recordings in compromise proposal on reduced VAT rates

Brussels, 23rd October 2003

The European music sector's campaign for a reduced VAT rate on sound recordings received a boost today when music was put back on the table of VAT negotiations in Brussels. The Italian presidency of the EU put forward a compromise proposal that suggests adding sound recordings to the list of cultural products that currently benefit from reduced VAT rates.

This development follows intensive campaigning by a VAT Coalition* to end cultural discrimination against music. VAT on sound recordings is currently set at between 15% and 25%, while other cultural products such as books, magazines, newspapers, entrance tickets to cinemas, theatres and concerts benefit from reduced rates upwards of 5%. These cultural products are currently listed in Annex H of the 6th VAT Directive which is now under review. The Italian presidency proposes adding sound recordings to Annex H so they could also benefit from reduced VAT rates.

The European Commission failed to take on board economic and cultural arguments in favour of a reduced VAT rate on sound recordings in its initial July proposal for review of the 6th VAT Directive. But the Council and the European Parliament have proved more willing to address the issue of cultural discrimination against music.

The European Parliament's Economic and Monetary Affairs Committee held a Hearing on Reduced VAT Rates on 7 October, where French artist Jean Michel Jarre spoke on behalf of the VAT Coalition. The subsequent draft report by Christa Randzio-Plath MEP supports a VAT reduction on sound recordings. This report, when adopted, will be the Parliament's contribution to the negotiations among EU Finance Ministers who are expected to make a final decision before the end of the year.

A VAT Coalition comprising representatives of authors, composers, music publishers, performing artists, artist managers, independent and major record companies, entertainment retailers and collective management societies, have been working under the banner "Give Music a Break" to press for a VAT cut on sound recordings. The entire music chain from entertainment retailers and record companies have given a public undertaking to maximise the benefits of a VAT reduction for European consumers, making the diversity of European music more accessible for everybody.

Over 140,000 EU consumers have signed petitions demanding a VAT cut on sound recordings. The Petition was signed in retail stores and on music websites across Europe. The music sector's campaign also has the backing of over 1,300 European artists and composers who have signed petitions calling for a VAT reduction on sound recordings. Signatories include: Roberto Alagna, Cecilia Bartoli, Andrea Bocelli, Pierre Boulez, Patrick Bruel, Carla Bruni, Chris de Burgh, Johnny Hallyday, Julio Iglesias, Elton John, Eros Ramazzotti, Axelle Red, Nana Mouskouri and Anne-Sophie Mutter. They are joined by a whole range of niche artists, all of whom make a vital contribution to Europe's diversity, heritage and reputation for innovation. The full can be seen at www.givemusicabreak.com.

*The VAT Coalition comprises:

EMO - European Music Office,
GERA-EUROPE, Global Entertainment Retail Association-Europe
GESAC, European Group of Societies of Authors and Composers
GIART, International Organisation of Performing Artists
ICMP/CIEM, International Confederation of Music Publishers
IFPI, Representing the recording industry worldwide
IMMF, International Music Managers Forum
IMPA, International Music Publishers Association
IMPALA , Independent Music Companies Association

For further information, please contact:
Francine Cunningham, IFPI, Tel: +32 (0)2 511 92 08,
Mobile: +32 478 261995 , E-Mail: francine.cunningham@ifpi.org;
or Gabrielle Guallar, Impala, Tel +32 (0)2 289 26 00,
E-Mail: gguallar@kernnet.com