We have been discussing the developments about the EU Commission’s infringement procedure against Luxemburg and France related to their application of the super reduced VAT rates for ebooks several times in the past (last time here). The EU Commission is of the view that under the current VAT Directive rules ebooks should be regarded as all other eservices and taxed with the standard VAT rate. Luxemburg and France are of the opinion that ebooks should be taxed as their physical contra-parts – i.e. as books.
As reported on PwC’s GlobalVATonline, the Court of Justice of the European Union (“ECJ”) has recently published the EU Commission’s infringement procedure case against France. There is no official news about the infringement procedure case against Luxembourg available at this moment.
You can access the referral here.
What does this mean for you?
As previously indicated, if your company is selling ebooks in France or to French B2C customers (depending on your business setup) you might even wish to reevaluate your long term pricing strategy and prepare steps what to do in case if the ECJ shares the opinion of the European Commission that ebooks should be taxed at the standard VAT rate.
And with the steps we mean the logical ones (i.e. a price increase or margin reduction to account for a VAT rate change from 5.5% to 19.6% and accounting/VAT/online sells system adjustment to account for this) and also the less logical ones – i.e. how to explain this change to your customers.