EU permits differing VAT rates on printed and CD books

Tue 20th May 2014

The European Court of Justice’s Advocate General (AG) has issued an opinion on the question of whether member states may have differing VAT rates for printed books vs. books available on CDs or memory sticks.

Printed books at reduced EU VAT rates

The issue was referred by Finland, and comes against a backdrop of on-going cases against France and Luxembourg for their use of reduced VAT rates on e-books.

Finland requested the AG to consider whether the European Union VAT Directive prevent countries from applying different rates for printed boxes compared to the same books being supplied via CD, CD-ROMs or memory sticks, and allowing for the basic principle of neutrality. The AG ruled that it did no prevent reduced rates on printed books whilst the standard rate is applied to CDs etc.

The EC prosecutes France and Luxembourg for reduced VAT on ebooks.

Currently, Luxembourg and France charge reduced VAT rates on the supply of e-books – 3% and 5.5%, respectively. Many other countries, such as the UK and Germany, charge their full standard VAT rates. The differences come about because whilst the EU VAT Directive does permit a reduced rate on printed books, it is silent on electronic books. The European Commission has launched legal cases against both countries last year, and there have been attempts to bring some harmony on VAT rate treatment during the recent Polish presidency.