Members of the European Parliament have asked the Commission to take urgent action to align VAT rates for electronic books and press with those applied to paper publications. But no reform will take place before 2016. EURACTIV France reports.
Andrus Ansip, the Commission Vice-President for the Digital Single Market, told the European Parliament in Strasbourg on Monday (18 May) that the European executive intends to review the VAT on electronic press and books… in 2016.
“The Commission has already started working on the VAT regime, including looking at the application of reduced VAT rates,” Ansip said.
“The Commission will communicate its plans next year, and the reduction of VAT on e-books and online press will be re-examined at the same time,” he added.
When it arrives in 2016, the Commission’s proposal will only be the first step in a long process of negotiations between the member states, as any revision of taxes in the EU requires the unanimous approval of the 28.
The European Parliament is not happy with the prospect of a drawn-out process, and MEPs from all political groups are arguing in favour of aligning the VAT on paper books and their digital versions.
>> Read: Brussels sets its sights on French electronic book market (in French)
Under European law, electronic publications cannot benefit from the same VAT reductions as paper publications. French customers pay 2.1% VAT on printed books, while British customers pay 0%. In both countries the VAT on electronic books is 20%.
Distortion of competition
MEPs believe this is an unacceptable distortion of competition. “We do not understand why there would be two different levels of VAT for the same product,” German EPP member Andreas Schwab said. This opinion is “virtually unanimous” within the Parliament, according to the French MEP Jérôme Lavrilleux.
The question of VAT reductions became urgent when France and Luxembourg were convicted in March by the Court of Justice of the European Union (CJEU) for reducing the VAT on digital books.
Pervenche Berès, the head of the French Socialist delegation in the European Parliament, said “For many years we have been calling for the alignment of VAT rates on paper and electronic books. It took the conviction of two member states for the issue to catch the attention of the College of Commissioners.”
The CJEU judgement met with hostility from the culture ministers of France, Germany, Poland and Italy – but not Luxembourg – who wrote to the European Commission on 19 March, demanding a review of the VAT regulations, so they can align the tax rates for all books in all forms.
Shortly after the judgement against France and Luxembourg, European Commission President Jean-Claude Junker came out in favour of a VAT review during a discussion with German editors.
But if the European executive agrees on the need for reform, timing is another issue altogether. “We all agree in the Commission: it is an urgent question,” Andrus Ansip said.
In the meantime, the countries convicted by the CJEU must realign their VAT rates for digital publications with the current European rules. And other countries could also find themselves on the wrong side of the CJEU before the rules are changed.
For Pervenche Berès, this is nonsensical. “The CJEU must take note of the will expressed by the legislature, as new cases could come up before the VAT directive can be changed,” she said.