Luxembourg: Infringement procedure on VAT rates for ebooks

Not long ago we have updated you about the EU Commission’s infringement procedure against France related to their application of the super reduced VAT rates for ebooks. France and Luxembourg share the opinion that ebooks should be taxed as their physical contra-parts (as books), whereas the EU Commission has the opinion that under the current VAT Directive rules ebooks should be regarded as all other eservices and therefore taxed with the standard VAT rate.

Following the published case against France two weeks ago, the Court of Justice of the European Union (“ECJ”) has also published the EU Commission’s infringement procedure against Luxembourg. Some more information are available at GlobalVATonline.

What does this mean for you?

If your company is selling ebooks in Luxembourg or to Luxembourg based B2C customers, you might wish to reevaluate your long-term pricing strategy and prepare steps what to do in case the ECJ shares the view of the European Commission that ebooks should be taxed at the standard rate.

With steps we mean especially those having a direct impact on your sales price (e.g. a price increase or margin reduction to account for a VAT rate change from 3% to 15%) or profit margin (e.g. if you are employing a uniform price policy across the EU) and also those addressing this issue in public (e.g. explaining this change to your customers).