introduction
Investment obligation of 4% of gross income for all film suppliers in Switzerland
Online film suppliers subject to a 30% quota for European films
New registration, declaration and notification obligations punishable by fines
Comment

introduction

On October 12, 2021, the Swiss Confederation released the revised Cinema Law after controversial debates in Parliament (for more details, please see “Proposal to Revise the Cinema Law: Investment Obligation for Film Suppliers online and quotas for European films ”). The Parliament has decided to increase the diversity of the cinematographic offer and to strengthen Swiss film culture by including online film suppliers within the scope of the cinema law. All companies offering films as part of their programs or as on-demand or subscription-based electronic services (ESDS) in Switzerland must comply with a new obligation to invest in independent Swiss film productions. In addition, companies offering films in ESDS in Switzerland must allocate at least 30% of the capacity of their platform to European films.

Investment obligation of 4% of gross income for all film suppliers in Switzerland

The imbalance existing in Switzerland between the traditional actor (for example, broadcasters) and the providers of the ESDS with regard to the financing of national film productions will be resolved by the inclusion of a new investment obligation in the independent Swiss film productions. Consequently, companies offering films as part of their programs or as ESDS in Switzerland must devote at least 4% of their gross income each year to independent Swiss film productions or pay a corresponding compensation. While the National Council initially wanted a 1% investment bond, the Council of States ultimately won. The clearing commission is due if the investment obligation is not fulfilled on average over a period of four years. This obligation also applies to companies domiciled abroad, insofar as they target the Swiss public. However, their investment obligation will only be calculated on the gross income generated in Switzerland and only on the income from the cinematographic offer. Companies which do not reach a certain minimum turnover, only screen or offer films occasionally, or for which the obligation would be disproportionate or impossible, are exempt from this investment obligation. The Cinema Law provides examples of such disproportion or impossibility, namely:

• the type of films offered or the thematic orientation of the offer;
• low reach of the television program; Where
• an unchanged offer of programs or offers of third parties.

A company can offset certain expenses with the amount of the investment due, such as expenses for the acquisition, production or co-production of Swiss films and recognized Swiss-foreign co-productions. However, some expenses cannot or can only be partially compensated. It should be noted that only expenses paid to third parties independent of the ordering company are eligible for compensation. In addition, grants from the Confederation, cantons, communes or contributions which are otherwise financed by public institutions must be deducted from the expenditure. Expenses for the promotion of Swiss films or of Switzerland as a location can only be counted for a maximum of 500,000 Swiss francs per year and per television program. Finally, the expenses of film financing institutions can only be considered if the institution is recognized by the Federal Office of Culture (OFC).

Online film suppliers subject to a 30% quota for European films

In accordance with the European Audiovisual Media Services Directive, the Cinema Act provides for a quota for European films. Thus, companies offering films in ESDS must ensure that at least 30% of the films available on their platform are European films. This obligation also applies to companies whose domicile is registered abroad and which are intended for the Swiss public. Companies which do not reach a minimum income or only offer films occasionally are exempt from this obligation. There is also a derogation if the obligation is to be characterized as disproportionate or impossible, in particular:

• due to the type of films offered;
• due to the thematic orientation of the offer; Where
• because the company only offers unchanged third-party offers.

In addition, European films must be specifically labeled and easily accessible.

New registration, declaration and notification obligations punishable by fines

The Cinema Law provides for additional obligations directly related to the aforementioned investment obligation and quota. All companies offering Swiss films in their programs or as ESDS must register in a designated public register of the Swiss Confederation (currently run by OFC). In addition, if a company is not registered in the Swiss trade register, it must indicate a service domicile in Switzerland and name the responsible persons. In addition, all companies subject to the Cinema Act must report annually to the FOC on the fulfillment of their quotas and their investment obligations. Finally, all companies offering paid ESDS in Switzerland must declare the number of views per film to the Swiss Confederation. These data will be published periodically. Anyone who deliberately violates their registration obligation, or any member of management who does not comply with their reporting and notification obligations or deliberately provides false information, is liable to a fine.

Comment

The revised cinema law is subject to a possible referendum. Various stakeholders have already launched their referendum campaigns against the revised cinema law. The deadline for the referendum is January 20, 2022. It remains to be seen whether the Swiss people will have to vote on the issue. In the meantime, companies offering films, especially online film suppliers, are well advised to adapt their business structures and offerings to prepare for these new investment and quota obligations.

For more information on this topic, please contact Jürg Schneider, Annemarie Lagger Where Lukas Waeber at Walder Wyss by phone (+41 58 658 58 58) or by e-mail ([email protected], [email protected] Where [email protected]). The Walder Wyss website can be accessed at www.walderwyss.com.