GovernanceRegulationEU Tax Case Rules on Electronic Books

EU Tax Case Rules on Electronic Books

The European Union’s (EU) top court has ruled that electronic books cannot benefit from the same reduced rate of value-added tax (VAT) as paper books. However, the European Commission has indicated that it could change the rules next year so e-books and paper books are taxed similarly.

Since 2012, France has applied a 5.5% VAT rate and Luxembourg a 3% VAT rate on e-books, the same rate as for paper books. The European Court of Justice (ECJ) decreed that both countries must apply their normal VAT rate, which for France is 20% and for Luxembourg is 17%.

In 2013, the European Commission (EC) sued both countries for breaching of the EU’s VAT rules, a position that was upheld by the Luxembourg-based ECJ.

US e-books retailer Amazon, based in Luxembourg, had applied the 3% rate to sell e-books throughout Europe. This changed in January this year and VAT for e-services is now levied based on the country where the customer is located.

In its ruling, the ECJ argued that a reduced rate can only apply to physical books and that even though e-books can be read on tablets and computers, they should be considered “electronically supplied services”, not goods. EU law decrees that reduced VAT rates can only apply to goods, not e-services.

France and Luxembourg agreed to comply with the verdict, but will lobby for an overhaul of EU rules on VAT in order to align rates between physical books and e-books.

Related Articles

India-US trade corridor: Accelerating growth with reverse factoring

Deals & Markets India-US trade corridor: Accelerating growth with reverse factoring

2m Vinod Parmar
China’s regulatory changes stimulate international interest

Asia Pacific China’s regulatory changes stimulate international interest

3m Michael McCaw
“Destroy or democratise” – how Open Banking will impact connectivity

Banking “Destroy or democratise” – how Open Banking will impact connectivity

3m Victoria Beckett
Treasury TV: Yeng Butler compares US and European MMF reforms

Compliance Treasury TV: Yeng Butler compares US and European MMF reforms

3m Victoria Beckett
Money market reforms: Navigating LVNAV, CNAV and VNAV

EEA Money market reforms: Navigating LVNAV, CNAV and VNAV

4m Victoria Beckett
The Challenge of Building and Maintaining a Central Treasury Operation in a Decentralized Company

EEA The Challenge of Building and Maintaining a Central Treasury Operation in a Decentralized Company

4m BELLIN
The Treasury Challenge of a Post-Merger Integration

EEA The Treasury Challenge of a Post-Merger Integration

4m BELLIN
The Challenge of Integrating Worldwide Subsidiaries into one TMS

Baltics The Challenge of Integrating Worldwide Subsidiaries into one TMS

4m BELLIN