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EU court says ebooks aren’t books, must be subject to higher tax rates

Europe’s top court has declared that ebooks are ‘services’ rather than books, and that European countries are not allowed to give them the same favorable tax treatment as paper books. The reasoning, such as it is, is that ebooks cannot be used without a physical device, and ebooks are a service provided to those devices.

Both France and Luxembourg have applied to ebooks the same reduced rate of VAT (sales tax) enjoyed by books made from crushed trees. The WSJ reports that the EU has ruled that this is illegal.

Since 2012, France has applied a 5.5% VAT rate and Luxembourg a 3% VAT rate on e-books, the same rate as for paper books. The European Court of Justice said both countries must apply their normal VAT rate, which for France is 20% and for Luxembourg is 17%.

Europe already closed one ebook-related tax loophole: Amazon used to use its Luxembourg base as a reason to charge just 3% on ebook sales throughout Europe, but a change in the law forced it to apply the VAT rate applicable to the customer’s own country.

There is some small hope that sanity may prevail in future. The European Commission has said that there may be legal mechanisms through which countries can in future define their own policies, with an “extensive overhaul” of VAT rules to be completed next year. However, don’t be surprised if ‘harmonization’ of tax rates for paper and digital books results in higher taxes on the former to pay for lower taxes on the latter …

Apple of course had its own legal troubles around ebooks, with its pricing model found to amount to anti-competitive practices.

Via Engadget

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Comments

  1. depicus - 9 years ago

    Great to see bureaucracy taxing knowledge – that’s why we hold you in such high esteem.

  2. What?! It’s a book. No matter in what form it is. Books are plus for us, they educate us, they allow us to evolve and they want to put higher taxes on them in e-form? That’s plain stupid. Let’s tax everything.

  3. mpias3785 - 9 years ago

    Isn’t a bundle of bound paper a physical device? The last time I bought a book I didn’t get a bag of ASCII.

  4. So ebooks cannot be used without a physical device, and ebooks are a service provided to those devices?
    But “books” cannot be used without a physical bunch of physical paper. Are “books” a service provided to paper?

  5. Every time if there’s a decision to make more profit the EU Commission has no problem for a common decision. But if there’s no profit to be gained the commission can’t rule. The EU is just a way to make a lot of money, really a lot! Not make our lives easier. All the laws here are to maximize the profit of the big players. Here in Luxembourg with all the big companies paying nearly NO taxes, but the people have to pay everything now with the VAT going up from 15%-17% (so we were told it will be just 16% before the elections).

    • Ben Lovejoy - 9 years ago

      20% in the UK …

      • 25% in Norway… ;)

      • Ben Lovejoy - 9 years ago

        Ouch! Yeah, Norway is terrifyingly expensive. I half-expect to be taxed on the air I breathe while visiting.

      • diablo2211 - 9 years ago

        You could try sweden. We have highe taxes here. And yes, stupid decsion. One needs solaro other light and eyes to read ordinary bks. Why not tax that?

      • Ben Lovejoy - 9 years ago

        Don’t give ’em ideas …

  6. I wonder what these so-called geniuses would’ve argued the day paper replaced the stone tablet.

  7. RicardoTuga - 9 years ago

    In Portugal the taxes in AppStore have changed to 23% VAT rate (max.) after day 10 of 2015, in result of taxing in Europe depending on the country in which the sale occurred.
    I don’t know if they applied for iBookStore then also (or other, like iTunes)…

    Yes, at the time we noted that Luxembourg would have a different rate of our (23% => 3%).

    • RicardoTuga - 9 years ago

      Ebooks are valid and equal books !!! Should get same VAT rates of the regular paper books at worse scenario.
      Even thinking they cost less money to sell, and are more environmental friends in paper waste.

  8. mpias3785 - 9 years ago

    What if you’re vision impaired and need ebooks in order to zoom?

Author

Avatar for Ben Lovejoy Ben Lovejoy

Ben Lovejoy is a British technology writer and EU Editor for 9to5Mac. He’s known for his op-eds and diary pieces, exploring his experience of Apple products over time, for a more rounded review. He also writes fiction, with two technothriller novels, a couple of SF shorts and a rom-com!


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