Luxemburg – e-books are subject to the standard VAT rate as of 1 May 2015

The Luxemburg tax authorities were rather quick to the react on the ECJ’s recent decision on the VAT treatment of e-books. As reported in our previous post, in the infringement procedure against Luxemburg and France the court held that these countries incorrectly applied reduced VAT rate to the sale of e-books.

It is confirmed in a “Circular” published by the tax authorities on 16 March that Circular 756 is revoked with effect from 1 May 2015, and as of that date the standard VAT rate of 17% should be applied to the sale of e-books. (Please refer to the news update on PwC’s GlobalVATOnline.)

What does it mean for you?

Companies involved in the sale of e-books in Luxemburg have slightly more than a month to re-consider their pricing of e-books, i.e. a price increase or margin reduction taking into account the 14% change in the applicable VAT rate (form 3% to 17%).

Changes in the ERP systems must also be made to ensure that VAT is accounted for the correct rate.

It will be interesting to see whether France, which was also involved in the infringement procedure for similar reasons, will change it its rules with the same speed … (and we should keep an eye on Italy, too)

About Andras Salanki

Manager PwC Switzerland email: andras.salanki@ch.pwc.com Office: +41587924536

Andras Salanki is an international VAT advisor with 7 years of relevant professional experience. He spent one year on secondment in California, US, where he advised US multinationals on global VAT projects and also gained experience with IT and Internet companies based in the Silicon Valley.