Finland – Supreme Administrative Court decision on the VAT treatment of non-printed books after the ECJ decision (K Oy – C-219/13)

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2015 seems to start with book related VAT news in the EU. After the ECJ’s judgment in the K Oy case (C-219/13) which we previously discussed, the Finnish Supreme Administrative Court (“SAC”) delivered its ruling at the end of December. The SAC held that the standard Finnish VAT rate (currently 24%) applies to books on other physical means of support such as a CD, CD-ROM or memory stick.The ECJ left it to the national courts to decide whether fiscal neutrality (i.e. the same VAT treatment) is applicable to printed books and books published on other physical means. Even though the ECJ judgment also appreciated that this can also be impacted by the level of penetration of new technologies in the various EU Member States.

The SAC followed the argumentation of the ECJ and held that books on other physical means of support are not similar to printed books. According to the Finnish court the other physical means do not satisfy the same needs of the average consumer and therefore they cannot be subject to the reduced VAT rate. The SAC argues that books on physical means of support have a closer link to e-books downloadable from the internet, to which reduced VAT rates cannot be applied based on the EU legislation. As a result the SAC concluded that the different VAT treatment of printed books and books on other physical means of support does not offend the principle of fiscal neutrality.

What does it mean?

Considering the above decision, Italy’s recent move to apply the reduced VAT rate to e-books, as well as the pending French and Luxembourg infringement procedures indicate that the VAT treatment of the non-printed books remains an increasingly important area. It will be interesting to see how these will further develop, in light of the arguments used by the ECJ and the Finnish Supreme Administrative Court.

Italy – reduced VAT rate of 4% on e-books from 1 January 2015

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The Italian Parliament passed the 2015 Finance Law on 22 December, which applies the 4% VAT rate to e-books as of 1 January 2015. According to the legislation any publication that is identified by an ISBN code (International Standard Book Number) and transmitted through any physical or electronic means, should be considered as a book and as a result subject to the 4% reduced VAT rate.

This is a rather interesting move in light of the on-going infringement procedures which were initiated by the EU Commission against France and Luxemburg for treating e-books and physical copies in the same way by applying the reduced VAT rates also to e-books.

For further information you can contact Luca Lavazza (Partner), Alessia Angela Zanatto (Director) or Davide Accorsi (Senior Manager) of PwC Italy.

Luxembourg – increase of VAT rates from 1 January 2015

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As already anticipated in 2013 Luxemburg will increase its VAT rates as of 1 January 2015 to balance the loss of VAT resulting from the new B2C 2015 changes. Subject to the Luxemburg Parliament passing the proposed changes VAT rates will be increased as follows:

  • the standard rate from 15% to 17%;
  • the intermediary rate from 12% to 14%and
  • the reduced rate from 6% to 8%.

You can find further information on the VAT and other tax changes here or you can contact Mr, Laurent Grençon at laurent.grencon@lu.pwc.com or +352 49 4848 2060

Bitcoin – the rise of virtual currencies and their VAT implications

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In the last couple of years virtual currencies become more popular. Recently we can see that more and also well established businesses are accepting this as payment method every day, e.g. Dell, Overstock.com or Expedia – just to name a few completely different businesses. We already posted some updates on virtual currencies (here, here , here and here). In this update we focus on bitcoin, being one of the most widely known virtual currency and the VAT questions it has already triggered.
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Czech Republic – introduction of reduced VAT rate from 1 January 2015

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The Czech Republic is going to introduce a new VAT rate into its VAT legislation with effect from 1 January 2015.

On 6 November, the president of the Czech Republic signed the amendment to the current VAT law introducing a VAT rate of 10% from 1 January 2015. As a result of this, the Czech VAT law will have two reduced VAT rates.
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EU 2015 VAT Changes – Results of PwC’s 2015 Impact and Readiness Survey

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As indicated at our recent B2C 2015 work group event in Brussels PwC recently conducted a “2015 Impact and Readiness Survey” for which we invited businesses from across all sectors (telecom, broadcasting and eservice providers) and all geographical regions.We launched this survey with the aim of gathering data on the impact of the EU 2015 VAT changes on affected businesses. The survey also testes how ready businesses feel to be able to deal with the imminent changes.

We have now concluded the survey – which brought up some interesting themes and results – and are happy to share with you the summary report of our findings.

If you have any questions in relation to the results of the survey, do not hesitate to get in touch with us.

Czech Virtual Currency – Another Distribution step

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The Czech virtual currency, Czech Crown Coin (officially named by the authors “CZC”) which started the distribution of the pre-mined CZC in August 2014, is distributing a next set of 100,000 CZC to the first 1,000 EU based individuals who have registered and obtained the so called “myID” via the official website of CZC. This should increase the amount of CZC in the circulation as well as to support its usage and importance on the global level.

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France – B2C 2015 VAT chages – free event in Paris – 3 November 2014

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The French tax authorities together with the Enterprise Europe Network Paris Ile-de-France Centre and the European Commission will held a free of charge conference in Paris on 3 November 2014 to provide guidance on the new EU rules which will apply from 1 January 2015 regarding the B2C supply of telecommunication services, television and radio broadcasting, and electronically supplied services

  • Conference date: 3 November 2014
  • Time: 9.30am to 1.30pm
  • Venue: French Economy and Finance Ministry, Paris

For registration details please click here

Hungary – Creative taxation: Internet Tax proposed

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Earlier this week the Hungarian government submitted its proposed tax bill for 2015. One of the most interesting changes is the proposed introduction of the “Internet tax” that will be imposed on Internet service providers at a rate of HUF 150 (approx. USD 0.60) for every gigabyte of data or part thereof. By way of example, downloading a movie in HD quality (8.5 GB) would attract a tax charge of approx. USD 5 or the download of a 6GB game would have an additional cost of approx. USD 4 according to the original version of the proposal. You may expect that providers will try to recharge this cost to their customers, which makes surfing even more expensive.

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Japan – Legislation proposed for new Japanese consumption tax (JCT) on cross-border service transactions

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Current Rules

Japan’s current JCT regime was established in 1989 – before the rise of the digital economy. Accordingly, the taxation of B2C supply of eservices by non-established companies to Japanese customers was not considered and currently these are not subject to JCT.

This provides an unfair advantage to non-established eservice providers compared to Japanese businesses in this field, which has become more apparent since the JCT rate increased form 5% to 8%, with another increase to 10% estimated from 1 October 2015.

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