Spain's Tax for Purchasing Equipment to Record Digital Content Ruled Illegal

MADRID -- The digital canon Spain charges consumers on the purchase of equipment or material used for the recording or reproducing of digital content is an “abuse” and illegal, the European Union’s Justice Court ruled Thursday.

According to the court’s decision, the tax cannot be indiscriminately charged upon purchase, but may only be imposed on individuals, and not companies, administrations, governments or other entities.

Spain’s Culture Minister Angeles Gonzalez-Sinde announced she will seek an alternative, “along with the other European countries that are affected” by the decision.

Meanwhile, Spain’s Association of Internet Users applauded the ruling.

“It’s a decision that compensates for all the fights we’ve had over the past seven years,” Victor Domingo, president of the association said.

Spain instituted a tax on sales of all digital equipment in 2003 -- including mobile phones, MP3s, MP4s, USBs, CDs, DVDs, hard drives, etc. -- to compensate authors’ rights  for private copy.  In 2008, the tax was lowered to 0.17 euros for CD; 0.44 euros for DVD; 1.10 euros for phones, PDA; and, 3.15 euros for MP3 and MP4.

The canon earned revenues of some 100 million euros last year, with the largest Spanish society of authors’ rights SGAE, taking some 26 million euros of the sum.

According to Thursday’s ruling, said it was not necessary to verify if individuals were actually using the equipment to make private copy or not to be able to charge the canon.

“It is legitimately supposed that said physical persons benefit entirely from the availability [of making private copy for their private use].”

The ruling returns the decision to a Barcelona court that had asked the European authorities if the Spanish legislation conformed to EU directives as part of a suit brought by the company Padawan, which demanded 16.7 million euros as compensation for storage equipment it had sold from September 2002 to September 2004, arguing that the equipment was not always used to record protected content.