The European Commission is looking to tax video streaming services such as Netflix and Amazon Prime to fund the production of European movies and TV programs Politico is reporting. In addition to the tax, at least 20% of their catalogs must be European productions.

On-demand-video streaming services would also have to ensure that at least 20 percent of their catalogs for EU viewers were European productions. There is currently no quota.

A draft of the regulation reads "member nations may require providers of on-demand audiovisual media services to contribute financially to the production of European works."

The plan allows member nations to impose a tax on-demand services in their jurisdictions, falling short of France's bid to erase country-of-origin rules.

According to the Commission’s new plans, member nations would be able to “impose financial contributions [direct investments or levies allocated to national film funds] to on-demand services in their jurisdictions,” according to the 32-page draft of the Audiovisual Media Services Directive states. The plan falls short of France’s bid to erase country-of-origin rules, which would potentially expose businesses to laws of all 28 European Union countries, regardless of where they are headquartered. Currently, companies need only comply to the laws in the European country where they are based. The draft reforms are part of the Commission update of audiovisual media laws for a market that is increasingly moving to online internet platforms and mobile devices. The plans are a cornerstone of the Digital Single Market, which seeks to create a seamless economy for online activities by removing national barriers to streaming, online delivery, copyright and networks.

Netflix will now inevitably experience even further erosion of EBITDA margin

NFLX plunged on the news, after already taking a beating after the FOMC announcement...

Finaly, adding insult to regulatory injury, the regulation wouldn't stop there, as it also proposes a curb on child viewing of ads for salty, fatty, sugary and alcohol products.

Incidentally, what is about to happen to Netflix in Europe will soon happen to Netflix everywhere else where the sovereign host needs an easy source of capital. And since Netflix has no choice, it will promptly comply, because in the new normal where the entire world is running out of other people's money, those happy few who remain profitable are better known as "externalities" in government jargon, and their profits are about to be haircut.