A majority in the Danish Parliament adopts amendment to Danish VAT legislation and secures compensation

The Danish government’s proposal to impose VAT on royalty payments has been adopted by a majority in the Danish Parliament. The amendment to the VAT law means that VAT will now be applied to royalty payments, thereby impacting Danish rightsholders and the Danish rights economy, which until now has been structured around nearly fifty years of VAT exemption.

Gorm Arildsen, CEO of Koda, states:

‘It is very regrettable to see that, after years of discussion, after massive protests from the political opposition and all affected stakeholders, and in the absence of any legal obligation or requirement being imposed by the EU, the Danish government has nevertheless chosen to push through the artist VAT. Equally regrettable is the way it has been done; for example, an additional six months to adjust would have made a huge difference. We fear what the increased costs of TV packages and music rights will mean for music creators in Denmark.’

Compensation for artists on the way

The Danish Minister of Culture, together with the Socialist People’s Party (SF) and the Danish Social Liberal Party (Radikale Venstre), has also announced an agreement on compensation amounting to DKK 45 million annually for the artists affected by the new VAT law changes.

‘However, there is one small piece of comfort: we are pleased that the Danish government, along with SF and Radikale Venstre, has also announced an agreement on compensation to artists for the losses the artist VAT will cause them. While we disagree with the government on almost every aspect of this matter, this move shows a political willingness to mitigate the worst consequences of the law at a time when music creators and the entire music industry ecosystem are already under massive pressure. The gesture is appreciated,’ adds Gorm Arildsen.

The law change will inevitably lead to adjustments in Koda’s administration and have consequences of varying magnitude for certain member groups. For example, TV packages will become more expensive for consumers, which may well mean that fewer people will choose to pay for a TV package in future. This will lead to lower revenues for the artists and music creators in Denmark, who compose and produce music for television and film.

The bill will also mean that distributions to publishers must now include VAT. The same applies to distributions to heirs if they receive more than 50,000 kroner.

However, it should also be noted that individual songwriters and composers will maintain their current VAT exemption.

The bill will take effect on 1 July 2025. At Koda, we are now embarking on implementing the new regulations in our administration. We will keep you informed about further developments in the matter and about what the law change will mean for you as a member.