France to cut VAT rate on digital newspapers and magazines
The French government says it plans to reduce the VAT rate on digital newspapers and journals from the standard 20% rate to the reduced 2.1%.
French digital newspapers join e-books with reduced VAT rate
Currently, print newspapers and magazines bought by consumers in France from French publishers are subject to the reduced French VAT rate of 2.1%. The government now wants to give the digital versions the same tax break as it has already given e-books. In January 2012, the French VAT rate on digital books was reduced from 19.6% (the pre 2014 French VAT rate) to 7%. French e-books were then moved to the 5.5% rate at the start of 2014 when the 7% VAT French rate was abolished.
This followed a similar move by Luxembourg, which reduced its e-book VAT rate from 15% to 3%. Since Luxembourg is the home of Amazon Kindle, the most successful e-book retailer, this means consumers anywhere in Europe were able to buy e-books with more cheaply if they went to Luxembourg.
EC to challenge reduced VAT on digital sales
Last year, the European Commission filed court proceedings against both France and Luxembourg for their use of the reduced VAT rates on e-book. It claims that there is no provision for reduced VAT rates in the EU VAT Directive. It also believes Luxembourg is not permitted to have a reduced VAT rate of 3% since this is below the minimum rate allowed for in the VAT Directive.
The Polish EU Presidency last October tried to find an agreement between the member states on a reduced VAT rate to help promote digital print, but failed to get the necessary majority support.