France told by EU to raise VAT on digital news to 20%

Fri 11th Jul 2014

There are reports today in the French press that the European Commission is set to compel France to change back the French VAT rate on digital news to the standard VAT rate of 20%.  The EC is requiring France to respond by September.

France cut the reduced rates on digital news and journals to 2.1% in February 2014 to put it on a par with the printed versions of the same news.

Whilst EU member states are free to set their own VAT rates, the EU VAT Directive gives rules on any reduced rates.  At present, whilst there is provision for the application of reduced rates on printed news and books, this has not been extended to similar digital news.

The Finnish government recently asked the European Court of Justice for clarification of this point, and the ECJ ruled that the EC was correct is requiring a differentiation.

The EC currently has outstanding cases against France and Luxembourg on reduced rates for e-books.