EU court bans e-book tax perks
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Judgement could have big implications for electronic book industry (Photo: wajakemek | rashdanothm)
By Eric Maurice
The European Court of Justice (ECJ) ruled on Thursday (5 March) that France and Luxembourg cannot apply a reduced VAT rate on electronic books, but it imposed no fines and gave no deadline to comply.
The court said the reduced rate applies only to "the supply of books ... on all physical means of support" and that "such support is not included in the supply of electronic books".
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Electronic books sold in France and Luxembourg will have to respect normal VAT rates (Photo: ChodHound)
The court upheld a European Commission action launched against France and Luxembourg in 2013.
The court also "criticised" Luxembourg for applying a super-reduced VAT rate of 3 percent, with EU law prohibiting rates under 5 percent.
In France, the reduced rate for books is 5.5 percent. Electronic books sold in France and Luxembourg will now have to respect the normal VAT rate, of 20 percent in France and 17 percent in Luxembourg.
The ECJ’s judgement could have big economic implications for the electronic book industry, but also for online media.
Although the judgement does not refer to the case, some French online media have also started to apply the 2.1 percent reduced VAT rate which printed press benefits from. They could now be obliged to go back to the 20 percent full rate.
The judgement could also discourage online media in other EU countries to apply a reduced VAT rate, even through the court's formal decision was limited to the two states.
Meanwhile, if France and Luxembourg fail to comply, the onus will be on the commission to start a new action against both countries.
On the same day as the ECJ published its judgement, the French national union of publishers launched a campaign for EU harmonisation of rules on printed and electronic books.
Such a move would likely meet with opposition in several member states, including the UK, Denmark and Estonia.
