E-books to be taxed at higher rate, court rules

It may be the same old story, but EU judges said an e-book cannot be taxed at the same low rate as a traditional version.

The bloc’s top court ruled that Luxembourg, home to Amazon’s European headquarters, and France, must replace their 3% and 5.5% Vat rates for e-books with far-higher standard levies of 17% and 20%.

EU law only allows reduced rates for the “supply of a book on a physical medium”, the EU Court of Justice in Luxembourg said yesterday. “Admittedly, in order to be able to read an electronic book, physical support, such as a computer, is required. However, such support is not included in the supply of electronic books.”

Changes should be made “without delay”, it said.

The ruling adds to Luxembourg’s tax woes involving Amazon, which helped pioneer the e-book market with the introduction of the Kindle device in 2007.

EU competition watchdogs have criticised a potentially illegal fiscal pact with the online retailer. The probe was followed by revelations by a group of journalists of thousands of pages of leaked documents that showed international corporations effectively lowered their tax bills to less than 1% of profit in the country.

The case follows a spate of complaints from national governments and publishers that claimed Luxembourg and France were distorting competition elsewhere in the 28-nation EU. The European Commission took the two countries to court in 2013.

Consumers “should be able to buy a book at the same Vat rate, whether it be online or in a shop”, said Luxembourg’s government.

Bloomberg