France: Proposed increase of the reduced VAT rate to 7%

The French Prime Minister announced recently that from 1 January 2012 the reduced VAT rate for “standard reduced articles” is expected to be increased from 5.5% to 7% (subject to Parliamentary approval). This change will affect among others also the sales of all e-books in France; as we have reported previously France intends to sell the e-books at reduce rate as of 1 January 2012.

There will be some further exceptions to this reduce rate – food, energy, and equipment for handicapped persons are planned to remain taxable at 5.5%. France will thus have to implement two reduce rates as of 1 January 2012, which will make life for most of the in France VAT registered companies a little bit more complicated.