Court rules in favour of higher VAT rates on e-books
The UK and Germany pressured the European commissions (EC) to challenge the reduced VAT rates currently charged by Luxembourg and France on e-books, matching what they charge in printed copies, whereas the UK and Germany charge 0% and 7% respectively on printed books but charge their standard rates of 20% and 19% on e-books.
Under the EU VAT directive countries are allowed to levy a reduced or 0% rate on printed books. However it didn’t have an official on ruling e-books, which implies that the countries standard rates should be applied. However France and Luxembourg decided to go against this and treat e-books the same as printed copies, with Italy and Malta also joining them later on.
However after being pushed by the UK and Germany for a decision the European court of justice has ruled that e-books do not have the same characteristics of printed books and therefore cannot be subject to the same reduced rate. Meaning e-books are liable to the standard VAT rate in EU states, this is on the basis that it is a service and hence not listed in the EU directive as being subject to reduced rates.
This ruling means that France and Luxembourg now have to increase the VAT charged on e-books, with France making the change affective from 1 Jan 2016, and Luxembourg making the change from 1 May 2015.