Apple settles lawsuit against Chicago’s ‘Netflix Tax’

Illustration by Alex Castro / The Verge

According to a report from The Hollywood Reporter, Apple has settled its lawsuit with Chicago. A 9 percent tax was placed on "amusements that are delivered electronically"

The terms of the settlement weren't made public Revenues from the tax grew to over $30 million in the year ending June 30th, 2021.

It has been a while since the decision was made. Chicago tried to make up for lost revenue from traditional stores by introducing a new tax. Apple was one of the groups that objected to the law. Other groups that raised legal challenges were Sony Interactive Entertainment, the Entertainment Software Association, and an advocacy group for streaming services.

Delays were caused by the number of objections facing the tax. The case was put on hold for more than two years as the users of streaming services challenged it. The other legal challenges were either settled or dropped over time. Apple's amended complaint was dismissed last week because it claimed that the tax is unconstitutional. The Hollywood Reporter says that Apple didn't refile.

The city's tax income has tripled over the past five years and revenues from the "Netflix tax" are just a small fraction of it. In its first year, the tax brought in $9.4 million, rising to $28.6 million in 2020, and $31.2 million in 2021. Most of the city's other local business taxes were hit hard when physical locations were closed due to the swine flu.