VAT on digital books: Infringements
Wednesday 04 July 2012
The European Commission launched an infringement procedure, on 4 July, against France and Luxembourg because the VAT rates they apply to digital books may be incompatible with EU law. The VAT Directive (2006/112/EC) allows member states to apply reduced VAT rates to a limited list of goods and services. The downloading of digital books is regarded as a service supplied electronically and is not included in this list. It therefore cannot be taxed at the reduced rate. The Commission is considering the possibility of moving towards convergence of VAT rates applicable to traditional books on the one hand and to digital books on the other, but it will not be presenting proposals until the end of 2013. France and Luxembourg nevertheless decided to apply reduced rates to digital books from 1 January 2012, thereby infringing the current directive. France is applying a 7% rate and Luxembourg 3%.