On 3rd July 2012, the European Commission announced that it had sent a formal notice to the governments of France and Luxemburg, the first step of an infringement procedure due to their application of reduced rates of VAT to e-books.
At its General Assembly, FEP had adopted on 29 June a resolution (link to the resolution) calling for allowing experimentation with similar reduced rates for VAT for print and ebooks.
Although it regrets the EC decision, FEP will continue working with the EC to address the disparity of treatment. FEP welcomes the fact that the EC press release highlights that “the Commission launched a debate on the possibility of moving towards convergence of the VAT rates applicable, on the one hand, to traditional books and, on the other, to digital books. The Commission will put forward proposals by the end of 2013.”
France and Luxembourg will now have one month to explain their position, and if the Commission is not satisfied with the explanations it may formally acknowledge the infringement and ask France and Luxembourg to modify their legislation accordingly.
The Commission’s main concern with the application of reduced VAT rates on e-books is the potential distortion of the internal market that this could entail, considering that until 2015 the sale of e-books will be charged the VAT of the country where the vendor is located. Several other Member States had complained for this reason about the decision taken by France and Luxembourg.