On-line press and digital books will benefit from the same reduced VAT rates as printed copies. The EU finally closes this touchy issue

On-line press and digital books will benefit from the same reduced VAT rates as printed copies. The EU finally closes this touchy issue. TERA Consultants carried out an economic study to assist the French Government in its litigation with the Commission.

Context: In 2014, France adopted a law to apply a 2.1% VAT rate to both printed and digital press. In response, the European Commission initiated an infringement procedure since on-line publications are an electronic communication service to be taxed at the standard 20% VAT rate. In 2012, the Commission also initiated a procedure when France applied the reduced 5.5% VAT rate on electronic books. The European Court of Justice sanctioned France on March 5th, 2015.

In 2015, TERA carried out a study for the French Ministry of Culture, showing that printed and electronic press are substitutable products. As such and according to the European tax regime, the same VAT applies to substitutable, and thus competitive, products. This point weakened the Commission’s stance, and an agreement was signed to end this anomaly. Digitally-delivered information is now definitively recognized as a substitute to all printed information. Read the study in French.