Tax Alert

Refurbished phones and tablets in the scope of the private copy levy

Amanda Quenette
Refurbished phones and tablets in the scope of the private copy levy

Manufacturers and “importers” of refurbished mobile phones and tablets are now subject to the private copy levy in France, but this taxation is being challenged.

As an exception to the protected intellectual property rights of authors, copying of films, music, images, and books is allowed in exchange for a private copying levy paid by manufacturers and “importers” of storage devices to authors, artists, publishers, and producers of works copied onto these media.

This exception for private copying was created in Germany in 1966 and has existed in various forms in many countries, including France, since 1985.

The private copying levy is due in France when the concerned storage devices (e.g., tablets, smartphones, etc.) are put into circulation in France by their manufacturer or “importer”.

French Law applies a very broad definition of “importer” for the purposes of the private copying levy. This definition includes:

  • persons who realize intra-community acquisitions of goods in France from other EU Member States, as defined for VAT purposes and,
  • persons “involved” in bringing goods from outside the EU into France and making them available to end-users in France, regardless of the customs and VAT definitions of importation.

An extension of the private copying levy in a confused political context penalizes the competitiveness of the sector

The private copying levy would thus apply as from 1 July 2021 to second-hand devices put back into circulation after having undergone functionality tests aimed at establishing that they meet the safety and usage obligations that the consumer can legitimately expect, and if necessary, one or more interventions aimed at restoring their functionality.

Similarly, Law n° 2021-1485 of 15 November 2021 aimed at reducing the environmental impact of information technologies in France was enacted, codifying in French law the extension of the private copy levy as of 17 November 2021 to refurbished storage devices at rates different from those applicable to new devices.

Given the significant impact of the taxation of the private copy levy on refurbished storage devices on their cost to consumers and on the competitiveness of companies in the sector, the latter have filed actions before the Conseil d'État to suspend Commission Decision No. 22, which discretionarily broadens the scope of application of the private copy levy.

In addition, since 2018, French actors in the reconditioned devices sector have received information requests to declare their sales from Copie France, which is the entity responsible for collecting the French private copy levy.

Recently, Copie France has also issued requests for information and declaration of their sales to foreign sellers, identified on the website, and is taking them to court in France.

In summary, the highly contested position of the Private Copying Levy Commission is part of a confused legal and political context with the Ministry of Culture in opposition to the Ministry of Ecological Transition.

The extension of the levy to reconditioned devices strongly penalizes a sector that is nevertheless in phase with the very objective of Law n° 2021-1485 of 15 November 2021, which nevertheless provides for this extension of taxation. Finally, the legal proceedings initiated by Copie France against foreign companies undeniably harm France’s competitiveness.

Article paru le 17 décembre 2021, en français, dans Option Finance.