On December 26th, Mediapart received the first notification of a tax adjustment totalling more than 1 million euros and which covers the period of its first three years of operation (2008, 2009 and 2010). This not only concerns the sum of backpayments of a discriminatory VAT rate applied to the online press as opposed to the printed press (i.e. a rate of 19.6% instead of 2.1%), it also includes a penalty amounting to 40% of the sum demanded in backpayments, together with interest payments of 4.8% per year for the periods concerned.
This operation, ordered from on high and carried out in all urgency, is clearly designed to kill off Mediapart at the very moment when it was on the point of consolidating its economic independence.
Following the unusual use of a bailiff on December 17th to announce the imminent arrival of tax inspectors to study our accounts, this verification has until now been limited to two rapid visits by the inspectors to our offices on December 20th and 23rd. After a cursory check, and basing themselves on documents already prepared by the finance ministry’s the tax administration, the tax inspectors subsequently signified, again via the services of a bailiff, that we are subject to a tax adjustment concerning the first three years of Mediapart’s existence.
Their rush is explained by the fact that taking action before December 31st 2013 avoids the possibility that the adjustment could be pronounced null and void under a statute of limitations that places a time limit on such retroactive tax investigations.
But the urgent nature of this first control of tax returns confirms our darkest prognosis of the partisan and underhand nature of this fiscal attack. The 24-page document, dated December 24th and which we received two days later, is quite obviously not the fruit of the brief, formal meetings of the tax inspectors with our legal counsels. Already prepared on high, as demonstrated by the fact that it is in partly based on consultations among the finance ministry’s administrative services, to which the two inspectors had referred orally, this notification gave no recognition of any sort, not even the briefest acknowledgement, of the detailed written protest over the manner and nature of the inspection which was addressed to the tax authorities on December 20th.
The document we received from the tax authorities contained gross mistakes concerning the creation of Mediapart, notably with regard to the founding shareholders of this website, in which the tax authorities repeat the factual errors of a recent article about Mediapart’s finances published in a French weekly magazine. Visibly, this tax inspection has nothing in common with those to which companies are regularly the subject of. It is exceptional as much in its manner (one of precipitation and even brutality) as in its detail. Not only is it based on the application of a discriminatory rate of VAT for the online press (and which has been dismissed as unjust by all successive governments over the past five years, to the point where three current ministers have repeated their support for a neutral taxation of the press as a whole, both online and printed), but it also applies very heavy penalties upon Mediapart as if we haddissimulated our very public combat for equal taxation, or had made it in bad faith.
Everyone knows this is not the case, and especially the tax administration; Mediapart and all of the online press organizations which are members of the French Association for the Independent Online Press (Spiil), have continually raised the issue in public, engaged in meetings and hearings on the subject and lobbying. Everyone concerned knows that, amid these numerous discussions, the position of the Spiil – and thus Mediapart, a founding member –received the unanimous support in principle from all those we met, whether they be ministers, ministerial cabinet members, Members of Parliament, Senators, officials of the national audit office (the Court of Accounts), government advisors etc. All those concerned by this affair recognise the existence until now of a moratorium adopted by the tax authorities which excluded the imposition of any sanctions in the name of this unjust VAT rate – and which the public authorities themselves have insisted is one that they disapprove of.
Yet for those who concocted this punitive tax adjustment, within the reigning secrecy of the finance ministry’s higher administration, it is as if none of this ever took place. Even though we acted in all transparency and in the name of justice, we have been hit with penalties that treat us as if we were fraudsters and liars. On top of which, the tax authorities intend to annul a modest tax relief for research from which Mediapart benefits, and this without any consultation with the Ministry of Research - the only body that is competent to decide on such a matter concerning an innovating sector of activity in which Mediapart represents a pioneering model.
In all, and concerning our first three years of operation, the tax authorities have demanded backpayments of precisely 1,059,277 euros. Those three years were loss-making for Mediapart, even with our self-application of a VAT rate of 2.1%. As our readers know, via the online publication of our accounts every March, we ended 2008 with losses of 2,825,229 euros. That was followed by losses of 2,133,196 euros in 2009, and losses of 1,335,675 euros in 2010. It was only as of 2011 that Mediapart began making a profit, having attracted more than 40,000 regular individual subscribers.
So if the tax authorities have demanded more than 1 million euros for those years when we made a loss, one can only imagine what will be the result for those years when we made a profit (2011, 2012 and 2013). These are to be the subject of verifications by inspectors beginning on January 13th.
By our own calculations, in which we have included the same penalties as those already applied, the tax authorities could demand a further 6 million euros. This is a gigantic sum when compared with our probable turnover of 6.8 million euros for the year 2013, from which we expect a net profit of less than 800,000 euros. Which means that the tax authorities’ move is a putting to the sword rather than a tax adjustment. Even if the right to appeal leaves us with a time delay, this sword of Damocles above our heads places Mediapart’s survival and its independence in peril. Those in the finance ministry’s high administration know perfectly well that Mediapart faces, as of next March, a decisive moment regarding its financial independence (not least by reading a report about this in a French weekly magazine and which is not disconnected from the attack which has now followed).
This forthcoming decisive moment we face in reinforcing our independence concerns the purchase of the stake of a minority shareholder in Mediapart, a purely financial partner whose stake, invested in 2009, was set by common agreement to last only until 2014. The plans we developed for this forthcoming financial operation were naturally based on the accumulated financial success of Mediapart, and eventually also on its borrowing capacity. This partisan offensive by the tax authorities, if it is not swiftly annulled, will annihilate the virtuous solutions envisaged for Mediapart, by which it would progressively reinforce its financial block of independence via the creation of a non-profit-making press organization. The staggering sums that the tax authorities are demanding will ruin Mediapart if they are recovered in total, and if they are not they could durably impede the development of our online journal by destabilizing the company, its results, its shareholders etc.
'We seek no privilege or favour, only justice and equality'
At each stage of Mediapart’s short history, we have never hidden anything from our readers, and here we present you with the stark truth in this matter: the survival of Mediapart is truly threatened by this attack that is as illegitimate as it is illegal. It is as if we are being targeted not only for our audacious editorial approach but also for our entrepreneurial success. Mediapart demonstrated that it could succeed with its economic model in just a few years, creating jobs (on January 1st 2014 these will represent 50 full-time jobs on open-ended contracts and the activities of some 20 contributors – whereas we launched with a staff of 27), producing a rich collective output, building economic independence, and all from journalistic work alone. With no advertising, with no state subsidies, with no industrialist investors, but solely with the support of our readers and the work of the editorial team. It is this good news, of interest for all our profession, that some now seek to kill off, just when Mediapart was about to reinforce it position to become definitively out of harm’s reach.
The online press, of which Mediapart is an example of success, seeks no privilege, but simply justice. Equality is our only demand, and right is obviously on our side. To apply a VAT rate to the online press that is nine times more than that applied to the printed press is tantamount to placing shackles around its feet. It renders its development in face of the printed press impossible, closing forever the door of the French press to any new independent actor. Yes, that is what is in play here: continuing with the defeatist accompaniment of the crisis in the French press (and thus of our democracy) or, on the contrary, allowing a new surge of creation and innovation for the benefit of all.
We have hesitation in deciding on the right words with which to describe the attitude to this affair of those who govern us: incompetence, thoughtlessness, indifference, irresponsibility, malice, perversity? Or maybe all of that put together? Whatever, it is their fault that France suddenly finds itself at the bottom of a European table, fainthearted and waiting-to-see, while others adopt the reforming audaciousness of pioneers. Do those who govern us know that, for example, in Belgium the finance minister announced in October 2012 that he would apply a VAT rate of 0% for the online press – the same as for the printed press?
Couldn’t our French ministers have written to the European Commissioner for Taxation with the same message as Belgian finance minister StevenVanackere? He argued that the existing tax was “not adapted to the technological evolutions of the last few years” and that “this is slowing the development of digital platforms and significant investment”. The Belgian finance minister cited European judicial precedents (as has Mediapart) that gave him every confidence that the introduction of a zero rate of VAT “will not present a problem of distorting competition between member states given the local roots of the press”.
Just consider here that those in the French finance ministry’s high administration cite European law as being what forces them to discriminate against the online press! Is Belgium less European than France? All of this would be simply ridiculous if it wasn’t so alarming. For here we have the example of ruling elites disconnected from the reality of what’s at stake in the digital revolution, incapable themselves of inventing a dynamic ecosystem, chained to the past rather than open to the future.
The ‘digital regression’ that the Socialist Party’s ‘Durable Left’ movement recently drew attention to, citing the unjust treatment of the online press, is illustrative of an oligarchic France, isolated and disconnected from the world to the point of being blind in the face of the new - even wanting to nip it in the bud. The calculation tools of the finance ministry’s administration, for which the tax authorities are here the armed wing acting upon orders, are simply instruments for the destruction of an ambitious movement for the freedom of information at the service of citizens’ right to know.
We ask for no privilege or favour. We want only justice and equality, which is the immediate application of the same VAT rate to all of the press, whatever its platform of publication. We also call for the cancellation of all the tax verifications and adjustments that have targeted the online press because of this discriminatory system, one which is an attack against the Constitution’s assurance of the equality and pluralism of the press.
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- The original French text of this article by Edwy Plenel can be found here.
- You can sign a petition in support of Mediapart's appeal for equal taxation of the online and printed press by scrolling down to the bottom of the page that is accessed by clicking here.
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English version by Graham Tearse