Chamber Highlighted Several Problems Related to the State’s Plan to Collect Fee from Smart Devices

The Ministry of Justice has prepared a draft act according to which a fee up to 3 euros must be paid in the future for smart devices such as computers, smart phones and television sets. In the opinion of the Chamber, the draft has several problems and therefore made a proposal to the ministry to reconsider imposing of the fee for smart devices.

The main aim of the amendment is to allow paying fair compensation to the holders of the rights for works of music and film for the right to save music and films for personal use. At the moment the payment of the compensation is organised in Estonia in the way that the importers and manufacturers of certain recording devices and media (e.g. CDs and DVDs) have to pay a fee on every product. As the list of products has not been updated for years, the holders of the rights do not receive any indemnity. In order to improve the situation, the ministry would like to update the list of the products from which the fee is collected. For example, according to the draft act, the state wants to levy 1.3 euros on each computer and smartphone, 2 euros on each television set with recording functionality, 1 euro on digibox and 0.5 euros on USB memory stick.

Administrative burden increased

The system of payment of the indemnity must be transparent and with as little burdensome as possible for the companies, state as well as rights owners. However, in our opinion, the draft act will increase the administrative burden related to collection of the fee by tens or even hundreds of thousands of euros.

As the state is aiming to significantly expand the list of recording devices and media on which the fee would be collected, it will bring increased administrative burden on the companies that import these devices. Importers are required to keep account of the products on which the fee is charged and pay the fee. Additionally, administrative burden of the companies that buy smart devices for corporate use, may increase. Namely, the law provides that if a company exports products subject to the fee or uses them for own use, in this case, the company has the right to ask for a refund of the paid fee. Refunding of the fee in such manner is unreasonably burdensome.

For the purposes of decreasing the administrative burden on companies, we proposed to the Ministry of Justice to pay a fair fee to the owners of the rights of works of music and film through the state budget. If this proposal is not taken into account, we requested that the companies that export products subject to the fee or use them for own use be exempt from the fee.

Proposal to decrease fee rates

In the opinion of the Chamber, there is a risk that the fee rates in the draft act are too high. Upon entry into force of the amendments, the fee collected will be 0.9-1.35 million euros, which is nearly 3-5 times more than in 2007. During the same period of time, the average salary, however, has increased only approximately twice.

Furthermore, we are concerned that during the past few months, the ministry has increased the fee rates included in the draft without impact analysis and additional explanations. For example, in January of this year, the Ministry of Justice let us know that in case of smart phones and computers, the fee will be 0.6 euros per device, but by now the fee has been increased by more than twice, i.e. 1.3 euros. We proposed the ministry to decrease the fees in the draft. Furthermore, we proposed to not include recording television sets and digiboxes as well as internal hard drives not integrated with computers in the list of devices from which the fee is collected.

Paying the fair fee presumes carrying out of a study on consumer habits

In order to pay fair fee to the holders of the works of music and film, it is necessary to know, to what extent people use different devices for recording music and films. At the moment, the ministry is relying on a study that dates back to 2017. In the Chamber’s opinion, the study is outdated, because peoples’ consumption habits have significantly changed during that time. For example, during the recent years, the use of paid streaming services (e.g. Netflix, Spotify) has drastically increased and in the case of these services no additional fee has to be paid to the holders of the rights according to the Copyright Act. Therefore, we proposed the ministry to conduct a survey on the consumption habits of people before the system for the compensation is changed in order to find out, which devices are used and how often in order to make copies.

According to the current plan, the state is planning to enter the changes related to the smart devices fee into force on 1 January 2021. The draft act on collecting the fee on smart devices is available here.