The European Court of Justice has said VAT on e-books cannot be reduced to that of printed books.
The court today (Tuesday 7th March) gave an interpretation that e-books and e-newspapers were excluded from being allowed a reduced rate of VAT like printed books because they formed part of a specific VAT regime e-commerce, where clear and uniform rules needed to apply, reported Reuters.
The ruling was made after Poland's commissioner for civic rights questioned the fairness of a system which did not allow parity between printed products and their digital equivalents.
"(It) would effectively compromise the overall coherence of the measure intended by the EU legislature, which consists in the exclusion of all electronic services from the possibility of a reduced rate of VAT being applied," the judges said.
It means the EU's 28 member states will not be allowed to apply lower sales tax to e-books.
However, the ruling is only likely to make the case for the European Commission’s proposals released in December for new tax rules to enable the same VAT rates to be levied on print and e-books stronger. In December the EC put forward proposals to “enable Member States to apply the same VAT rate to e-publications such as e-books and online newspapers as for their printed equivalents, removing provisions that excluded e-publications from the favourable tax treatment allowed for traditional printed publications".
At the time the proposals were welcomed by trade bodies such as the European and International Federation of Booksellers (EIBF) whose co-president Jean-Luc Treutenaere said they were “destined to boost the e-book market and to further stimulate reading”.
All 28 member states of the EU have to accept the proposals for the rules to come into action and Vanessa Mock, the EC's spokesperson for Taxation and Customs Union, called on EU Finance Ministers to "move forward" on the issue when they meet in Brussels at the ECOFIN later this month.
Mock said: “We welcome today's judgement by the ECJ, which is in line with the commission's interpretation of current rules on VAT rates. The judgement confirms that only an amendment to the current rules would allow Member States the application of reduced VAT rates to e-books, online newspapers and periodicals. The commission has already made a proposal to allow Member States to do just that. We now count on the support of all EU countries to bring the rules up to date.
We call on EU Finance Ministers to move forward on this issue when they meet in Brussels at the ECOFIN later this month."
Today (Tuesday 7th March) a spokesperson for the EIBF said: "EIBF has been lobbying for years to allow those of the Member States who wish to have the possibility to apply reduced VAT rates to e-books as well as to paper books, and is happy that the commission VAT plan will soon make it a reality."
The UK levies a 20% VAT rate on e-books but a 0% VAT rate on printed books. If the 28 members states agree to chnage the rules, then individual countries would have to adopt the measures before they would take effect.