Canal+ is warning that a proposed increase in France’s VAT rate for pay-TV services could put its newly signed €980 million French cinema investment agreement at risk.
The French Ministry of Finance is considering raising the VAT rate applied to linear pay-TV services from 10% to 20% as part of preparations for the country’s 2027 budget. According to industry reporting, Canal+ estimates that the measure could increase its annual costs by more than €200 million.
The potential tax change comes only two months after Canal+ and French film industry organisations signed a new five-year agreement covering 2028 to 2032. Under the deal, Canal+ committed to investing €980 million in French and European cinema, equivalent to an average of €196 million per year.
Tax Proposal Puts New Cinema Deal Under Pressure
The agreement, which also covers CINÉ+ OCS, was presented in July as a major long-term commitment to French film production. It includes increased support for first films, emerging talent, animation, diversity films and mid-budget productions, alongside measures designed to improve the visibility of films.
The newly proposed tax change could now alter the financial conditions under which the agreement was signed. According to the information published by Le Dispatch, the contract includes a termination provision that addresses significant legislative or regulatory changes affecting Canal+’s tax burden or operating costs.
The issue has already triggered concern across the French film industry. Nine major cinema organisations warned in a September 25 letter to French President Emmanuel Macron that doubling the VAT rate could have serious consequences for the economics of the sector. The organisations also pointed to the potential impact on Canal+’s recently agreed cinema financing commitments.
Canal+ remains one of the key financiers of French cinema, making the future of the €980 million agreement particularly significant for producers and independent film projects. The July agreement was intended to provide a five-year framework for financing French and European films from 2028 onward.
The VAT proposal is expected to be considered as part of France’s 2027 budget process, meaning the final impact on Canal+ and its cinema commitments will depend on the measures ultimately adopted.
