France cuts VAT rate on digital news to 2.1% from 20%
The French government has updated the Tax Code to reduce the VAT rate on digital news and journals from the standard 20% rate to the reduced 2.1%. This puts digital news on a par with printed newspapers and magazines.
Reduced VAT on digital news from 1 February 2014
The new rate applies from 1 February 2014 as per the revised Article 298 septies of the French Tax Code. To qualify for the reduced rate, the publication must be officially recognised by the Commission Paritaire des Publications et Agences de Presse, which sets a long list of qualifying criteria for newspapers. The new subsidised VAT rate will also apply to approved technical journals, provided that the journal retains editorial independence from single sponsors.
This change is in line with the French reduced VAT rate on e-books. The European Commission has challenged France on e-books VAT rate as it believes it is contravention of the EU VAT Directive. This does permit a derogation on reduced rates for printed reading/books/news etc. However, this was never extended to digital versions. Countries such as the UK and Germany have challenged this, and the European Court of Justice is to have a hearing from a referral from the European Commission at the end of last year for France and Luxembourg.
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