Tag Archives: France

E-books – ECJ rules reduced VAT rate is not applicable

The ECJ today delivered its long awaited judgments on the infringements procedures against France and Luxemburg on the application of the reduced VAT rates to e-books.

The court held that, in line with the VAT Directive and Implementing Regulation, e-books qualify as electronically supplied services, and as such reduced VAT rates cannot be applied. Therefore, the VAT treatment of printed books (or more precisely, “books on of all physical means”, according to the VAT Directive), which are taxable at the reduced VAT rate in most EU countries, cannot be extended to e-books. In this respect, the ECJ also quoted its previous decision in the Finnish K Oy case, in which the court decided that the reduced VAT rate may be used for the sale of books on CDs or USB siticks, as these are “physical means”.

Accepting the ECJ’s argumentation and strict interpretation of the relevant legislation, the only option to use the reduced VAT rate for e-books as well, is to change the legislation. This is likely to be done as part of an overall review of the VAT system, which will be a longer process.

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

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.

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France: Infringement procedure on VAT rates for ebooks published

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.

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France: Compulsory electronic submission of accounting entry journal as from 1 Jan 2014

As from 1 January 2014, companies doing business in France, will be faced with a new obligation, the compulsory electronic submission of the accounting entry journal, so called “FEC” (“Fichier des écritures comptables”).

This obligation is applicable in case of tax audits as from 1st Jan 2014 with a back-dated effect to Fiscal Years 2011/2012/2013.

The e-file must include all the lines of accounting entries: no centralised/no aggregated entries. Find out more

France moves closer to taxing the digital economy

The digital economy has revolutionized traditional ways of conducting business around the world, while international tax rules have been slow to adapt to this new business environment. Many countries have started discussing ways to address this situation. At the international level, the recent G8 Summit held in Lough Erne, Northern Ireland, on 17 and 18 June, 2013, the upcoming OECD action plan on BEPS expected in July 2013 and the next G20 summit in September will likely provide additional guidance and proposals on the taxation of digital economies.

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France: Towards a super reduced VAT rate for digital press publications

According to a recently published press release, France is considering to apply a super reduced VAT rate for online press publications (2,1% instead of 19,6%) and this without the approval of Brussels.

As reported in previous posts, France and Luxembourg already started on 1 January 2012 to apply (super) reduced VAT rates for e-books (5,5% in France and 3% in Luxembourg) making them the cheapest countries to sell e-books in the whole EU.

The EU Commission saw this as an infringement against the EU VAT Directive and initiated infringement proceedings against both France and Luxembourg (Case No 2012/4080).

With this new proposal to Find out more

France Proposed VAT rate increase in 2014

The French government announced tax rate changes as part of a planned tax relief for companies last week. The proposal intends to make the French companies more competitive on the international market, however in return the VAT rates will be increased.

According to the announcement the standard VAT rate would increase from the current 19.6% to 20%, while the reduced VAT rate would increase from 7% to 10%. Some good news, that the super-reduced VAT rate is proposed to decrease from 5.5% to 5%.

As per the information published the VAT rate changes will be effective from 1 January 2014.

What does this mean for you?

Any change in the VAT rates in France will affect businesses both as suppliers and as customers. Businesses VAT registered in France, doing or planning doing business in France should therefore keep abreast with the developments.

EU: ebooks infrigement procedure – second act

As you are probably aware, France and Luxembourg have on 1 January 2012 started to tax the sales of ebooks at reduced VAT rate instead of applying the standard VAT rate. This means that ebusinesses selling ebooks through a sales entity in Luxembourg were able to tax them at 3% rate instead of 15% and in France at 7% rate (5,5% as of 1 January 2013) instead of 19,6%.

The EU Commission in its role of the guardian of the EU Treaties and legislation does not agree with the unilateral decision of France and Luxembourg and has therefore initiated a formal infringement procedure and has in July 2012 send them a Letter of Formal Notice.

A very good and conveniently brief explanation on the infringement procedure and its implications can be found here.

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EU: E-book rates – Commission strikes back

As reported previously here, here, and here, France and Luxembourg have unilaterally decided to tax e-books at a (super)reduced VAT rate. They decided to tax them as “normal” books instead as e-services as they should be treated by the letter of the EU VAT Directive. This gave e-book traders established in France and Luxembourg a considerable advantage when selling e-books to their EU customers compared to e-book traders in other EU countries as it made the e-books in France and Luxembourg approx. 12% cheaper than before (reduction to a 3% super-reduced VAT rate instead of the standard rate of 15% in Luxembourg and to 7% instead of 19.6% in France).

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