Tax Breaks on E-Books Illegal in EU

March 6, 2015 Taxation in EUTaxation in France

LUXEMBOURG – E-books in France and Luxembourg are set to become more expensive, as a new ruling has shown that these products are not physical goods and are not eligible for tax breaks.

On March 5th the European Commission ruled that the tax breaks currently offed by France and Luxembourg on the sale of e-books is illegal, and the tax break must be dropped.

Under current EU rules, the VAT applied to the sale of physical goods, such as books, may be reduced at the discretion of the governments of EU states, and under the details of the rules the governments of Luxembourg and France have opted to slash the rates applicable to the sale of e-books to a rate of 3 percent and 5.5 percent respectively, down from the standard rate of 17 percent and 20 percent respectively.

The tax breaks allowed by Luxembourg and France were initially justified by a ruling by the Court of Justice of the European Union, which, in 2012, ruled that e-books old on a physical media, such as USB stick or a Cd, were eligible for a tax break. However, now the EU has ruled that books old over the internet, and viewable on a physical device such as a phone or computer do not count as physical goods, and, therefore, are not eligible for the tax concession.

Photo By: mobilyazilar