Canal+ Faces €200M Hit as French VAT on TV Doubles to 20%

# **Canal+ Faces €200M Loss as French VAT Hike Slashes 10% Rate to 20%** The Paris‑based pay‑TV giant Canal+ has fired back at the French government’s plan to double the VAT rate on TV subscriptions from 10 % to 20 %.

The change, announced in a draft 2027 budget by Prime Minister Sébastien Lecornu, could carve a €200 million hole in the group’s annual revenue, a figure that would dwarf the modest gain the state would receive from the tax hike.

The proposal is part of a broader fiscal package designed to curb France’s mounting public debt.

Government estimates predict the national debt will reach a record 121.7 % of GDP in 2027, prompting a €43 billion package of “recovery measures” that includes VAT increases, cuts to public broadcasters, and new levies on foreign streaming services.

For Canal+, the VAT shift means a direct hit to subscription pricing, operating margins, and ultimately the creative ecosystem it supports across France and Europe. In the days leading up to the budget announcement, Canal+ already had its hands full.

The group had just announced a €1 billion investment in French and European cinema for the next five years, following an earlier €480 million commitment for 2025‑2027.

Those pledges underline Canal+’s role as a cornerstone of the country’s audiovisual funding model—a model now under pressure from the state’s fiscal tightening. ## Background & Context Canal+ was founded in 1984 and has grown into a multinational powerhouse, listing on the London Stock Exchange in 2024 as part of a restructuring led by media conglomerate Vivendi.

Its reach now spans nearly 70 countries, bolstered by a 2023 acquisition of the MultiChoice Group in Africa.

The company has long been a champion of French and European content, financing a wide range of projects from indie dramas to high‑budget series, and serving as a primary source of revenue for the French film and television industries.

The new VAT proposal directly targets domestic subscription services, raising the tax rate on paid TV from 10 % to 20 %. Canal+ estimates that, if enacted, the increase would translate into an annual loss of around €200 million—an amount that would hit the company’s operating margin hard.

In contrast, the state’s projected revenue gain from the same measure would be less than a quarter of that figure, The fiscal plan also proposes a cut to tax deductions for major digital platforms—YouTube, TikTok, Facebook, and Instagram—that currently contribute to the National Cinema Centre (CNC) under a system of content‑distribution obligations.

Since 2016, these platforms have been required to pay roughly 35 % of their advertising revenue to the CNC, a contribution that has recently been halved, expected to generate an additional €60 million in state revenue. the budget includes a planned €47 million reduction in public funding for France Télévisions, the state broadcaster.

Together, these moves represent a significant contraction in the public financing that underpins France’s film and audiovisual sector, a sector that relies heavily on both Canal+ and France Télévisions for investment, pre‑buying, and distribution. ## What People Are Saying Canal+ released a statement describing the VAT hike as “inconsistent” and “ill‑advised.” The company warned that the change would not only erode its revenue and operating margin but would force it to reevaluate its presence in France and its overseas territories.

Canal+ added that the resulting impact on subscription prices, workforce levels, and financial contributions to the film and sports ecosystems would be “invaluable” for the creative community. The film and television guilds of France, in a statement released earlier that week, echoed Canal+’s concerns.

They branded the VAT hike and the reduction in France Télévisions funding as a “direct attack” on the heart of French film and television financing. The guilds referenced President Emmanuel Macron’s 2023 Lumière Summit, which had pledged to place France at the center of global creative production.

By cutting the resources of two of the country’s main financial pillars, the guilds argued, the government is undermining the model that has allowed hundreds of projects—ranging from debut features to international co‑productions—to thrive.

Canal+ also said that the company would accelerate its international expansion strategy, . The move would, however, come with its own set of risks: it could lead to higher subscription prices for French consumers, a potential reduction in local content production, and an erosion of jobs in the creative sector.

Despite Canal+’s protests, the French government has not yet ruled out the VAT increase. The draft budget, presented on Thursday, is still subject to parliamentary debate and possible amendments.

For now, the company is bracing for the fallout while looking for ways to protect its domestic and international markets. ## What Happens Next The immediate next step for Canal+ is to reexamine its pricing strategy and cost structure in France.

The company’s leadership has signaled a willingness to absorb short‑term losses in exchange for a stronger global position, but the timeline for any operational shifts remains uncertain.

Canal+ is also preparing for a potential rise in subscription prices, a move that could push price‑sensitive consumers toward alternative streaming services, both domestic and foreign.

Meanwhile, the French film and television guilds are likely to lobby the government for a reconsideration of the VAT hike and the funding cuts. They may argue that the state’s debt‑reduction strategy must be balanced against the long‑term health of the creative economy.

If the government proceeds with the measures, the guilds could push for additional protective measures, such as tax incentives or alternative funding streams, to offset the reduced contributions from Canal+ and France Télévisions.

On the international front, Canal+ is poised to double down on its overseas markets, particularly in Africa, where its recent MultiChoice acquisition positions it as a key player.

The company may also explore new revenue streams, such as digital content licensing and cross‑border partnerships, to compensate for domestic losses.

The broader industry could witness a shift in how content is financed and distributed, with an increased focus on global platforms and private investment to fill gaps left by public funding cuts.

In the coming weeks, the draft budget will be debated in Parliament, and Canal+ will likely release further statements or take legal action if it believes the tax change violates existing agreements or the European Union’s competition rules.

The outcome of those debates will determine whether France can maintain its commitment to a vibrant, diversified creative sector while addressing its fiscal challenges. The next chapter for Canal+ is uncertain, but the company’s commitment to international expansion and its role in supporting French cinema are clear.

The industry will watch closely as the French government moves forward with its fiscal reforms, balancing debt reduction against the cultural and economic vitality that a robust film and television ecosystem provides.