Alain Beuve-Méry and Cécile Ducourtieux report in Le Monde that the Commission in Brussels has brought France and Luxembourg before the European Court of Justice over their application of a reduced rate of VAT to ebooks (the same rate, that is, that is applied to “physical” books).
In France the VAT rate on books is 7%, and that is the rate that has been applied to electronic books too. In Luxembourg the rate has been 3% since last year. The Commission wishes ebooks to be taxed at the normal rate for online services: in France this would be 19.6%
In a communiqué dated February 20th, the Commission stated: “The failure to respect this legislation by France and Luxembourg is generating serious distortions of competition to the detriment of other member states of the union.”
The different treatment of physical books and ebooks in terms of VAT rates has long been unpopular in France, Le Monde reports, at least in regard to what are called “homothetic” ebooks, that is those which simply reproduce the text of their physical equivalents without any multimedia “enrichment”. A low rate is also presented as a way of encouraging the rather slow development of ebooks in France and in particular of combating the power of Amazon.
Amazon, the world leader in electronic book sales, bases the greater part of its European activities in Luxembourg – with a view, it would seem of gaining a competitive benefit against anyone based elsewhere in Europe.
The VAT rate on books in Ireland is zero.