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The Cinema and the Rise in Value Added Tax

Mallorca’s cinefile community is delighted about the erstwhile Cinema Renoir reopening last weekend as a citizens’ cooperative. The new venture took over the Renoir’s premises as well as all fixtures and fittings and will now operate under the name of Cineciutat.

Enhorabuena.

However, last week’s announcement by the Rajoy government in Madrid to raise IVA (or VAT) from 18 to 21 % leaves Spain’s cinemas a bit in the doldrums, though, and Spanish cinema-goers are shocked and outraged. Why?

Ever since the Value Added Tax was introduced in Spain in 1986 with the entry into the European Community, art, theatres, cinema and other cultural affairs were charged IVA at a reduced rate. I can’t remember how much it was at that time, but by 2009 the rate had gone up to 7 %. Then, the tax percentage was raised to 8 % on July 1st, 2010. Now, with effect of September 1st, 2012, IVA at reduced rate will be charged at 10 %. So far, so good. But no. In the case of the cinema ticket, the status of a reduced rate will be cancelled and IVA will be charged at the new, full rate of 21 %. Just to put things into perspective, the same cinema ticket is being levied with a VAT rate of 2.5 % in France for the first 140 screenings and 7 % after that, in Germany 7 % is being applied and in the Netherlands, a mere 6 %. As it stands, cinema attendance in Spain has already suffered a fall of 39 % over the last nine years with the number of tickets sold decreasing from 137,000,000 to about 98,000,000. Industry sources expect that the new taxation will possibly cause the closure of 50 % of all of Spain’s cinemas. In Palma, three cinema complexes closed in the last two years, counting the Renoir as one of them.

Let’s hope the new Cineciutat will not be one of the cinemas adversely effected by the increase in IVA.

The photo (top) was taken in Palma, Mallorca, Baleares, Spain. The date: July 14th, 2012. The time was 16:41:41. The photo (bottom) was borrowed from the Internet, courtesy of CineCiutat and the photographer, Andreu Tur.

Moltes gràcies, and

muchas gracias.

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