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CJEU ends reduced VAT rate on e-books

CJEU Case C-502/13

March 2015

On 5 March 2015, the CJEU published its decision in the Case C-502/13, Commission vs. Luxembourg. The dispute concerned the VAT rate to be applied to e-books in Luxembourg.

Since the 1st of January 2012, Luxembourg had applied its super-reduced VAT rate of 3% to the sale of e-books, mainly based on the argument that a broad interpretation should be given to the notion of books, so that no distinction between a physical and an e-book should be made.

On its turn, the Commission argued that applying a 3% VAT rate was against to the obligations lying under Council Directive 2006/112/EC, which clearly prevents Member-States to apply reduced rates to electronically supplied services.

On its decision, the CJEU has agreed with the arguments of the Commission, declaring that the application of a 3% VAT rate is against the said Council Directive and also disregarding other arguments supported by Luxembourg to apply a 3% VAT rate, such as the qualification of such supply as a supply of goods or that such distinction would breach the principle of fiscal neutrality.

In the same coherent way, France, as well, cannot longer apply its reduced VAT rate on e-Books.

E-books are therefore subject to the standard VAT rate.

We note that the place of taxation to define the appropriate standard VAT rate to apply in a “B2C” transaction must be determined according to the new VAT e-Commerce rules that are in force since the 1st of January 2015.   

This article was featured in Input, Deloitte Luxembourg's VAT Newsletter.

Click here to read previous editions.

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