France, off-the-law on digital books – BBC

The French state will no longer apply a reduced VAT rate to 5.5% on digital books, announced the Justice. French publishers denounce this decision.

The Court of Justice of the European Union has ruled. France can not continue to apply a reduced VAT rate to 5.5% on digital books. The Hexagon was requested to review its applying classical 20% VAT.

Since 2012, the French state, assuming that a book, whatever its medium, remains a book, chose to harmonize the VAT rate of digital books with the paper. Logic, in short, is to give priority to the work on the media. With the aim to promote access to as many books and support the development of a new market, potential reservoir of growth and jobs.

But Brussels felt that this was off-the-law. The Union takes the view that a dematerialized book is part of a service and can not be considered as a cultural property. As such, it can not benefit from reduced VAT rates. Actions brought by the Commission against France were based on the 2006 guidelines stating that “the reduced rates do not apply to services supplied by electronic means” and that “reduced VAT rates do not apply to the provision digital books. ” In other words, this judgment is not a surprise.

Moreover, publishers, had anticipated. Earlier this week, the National editing Union (SNE) has launched a major viral campaign on the Internet and social networks, called #CeciNestPasUnLivre to “create a European movement against discrimination of readers of digital books.” In a joint statement, the entire sector (associations of publishers and booksellers) called on the European Commission “to take action quickly to change current legislation and ensure that it reflects technological advances and removes a serious obstacle to development of the ebook market. ” They point out that this would be consistent with the work program approved by the Commission which states that “the barriers to digital are barriers to jobs, prosperity and progress.”

In this emerging sector in any case, this announcement is a blow, even if the digital book currently represents only 1.6% of the total market value of an older version as figures from GfK. But it is growing rapidly as the downloaded tracks sales jumped 45% in 2014. For the consumer, a VAT increase could increase the price, unless publishers absorb the extra cost. “ This decision may penalize many French companies, including SMEs, increasing the cost of purchase for the reader ,” said UMP Frédéric Lefebvre.