Netflix has been told by the European Union Court of Justice that it must contribute to the German Federal Film Board (FFA), which funds local film and television production.
A law, passed in Germany in 2014 and approved retrospectively by the European Union in 2016, requires that all German streaming companies contribute 2.5 per cent of their revenue to the FFA.
Netflix had argued that it shouldn't have to contribute as it is not technically a German company. The company said if the German law is upheld, they could face different regulations in different countries across Europe.
The court rejected the suit as inadmissible, dismissing Netflix's argument that it could not find justice in the German system. It did not rule on the legality of the subsidy levy itself, which could give Netflix the opportunity to challenge the ruling in Germany. Otherwise, Netflix must comply with the law and also, retrospectively, pay a portion of its German earnings from 2014 to the present.
"The Court's decision on this procedural matter is disappointing though not surprising as we knew we first had to clear with the Court whether our case was admissible," Netflix said in a statement. "We will review the full details of the decision when they are made available."