The exclusion of electronic books, newspapers and magazines from reduced-rate VAT, as provided for in EU law, is compatible with the principle of equal treatment, said Advocate General Juliane Kokott at the European Court of Justice on Thursday 8 September (case C-390/15).
This aspect of the VAT Directive (2006/112/EC), which only allows reduced-rate VAT to be applied to e-books supplied by means of a physical medium, such as on a CD, and to printed books and newspapers, was challenged by the Polish ombudsman. The case went to Poland’s constitutional court, which had doubts about its lawfulness and sought advice from the European Court of Justice.
In her conclusions Kokott said that the currently stipulated difference in treatment is justified. Digital publications transmitted electronically do not necessarily compete with printed publications, she said. Likewise for digital newspapers and magazines supplied on physical supports, which are also excluded from reduced-rate VAT. The various publications are different in nature, she said, with different production and distribution costs.
The most important issue, however, is that she took the view that it is for the European legislator, and not the Court, to decide how the fundamental objective of preventing distorted competition. She justified this by the fact that the situation on member states’ markets and the single market is in constant flux, which has to be assessed by the political authorities.
Later this year, the European Commission is due to unveil draft legislation on these matters (see other article). (Original version in French by Jan Kordys)