ECJ Decision (K Oy): VAT rate for non-printed books


On 11 September 2014, the Court of Justice of the European Union (ECJ) gave its decision in K Oy (case C-219/13) regarding the question whether reduced rates for books published in paper form should equally be applied to books published on another physical medium, or whether different VAT rates can be justified.

The Court has ruled that a selective application of the reduced VAT rates to printed books only is not justified unless the printed books meet different needs for consumers as compared to books published on another physical medium such as CDs, CD-ROMs or USB keys or made available on e-readers.

The Court also finds that, to ascertain whether goods are liable to reduced or standard VAT rates, the average consumer in each Member State must be taken as a reference.

If what matters for that consumer is essentially the similar content of all books, regardless of their physical support or characteristics, the selective application of a reduced VAT rate is not justified.

What could this mean for publishing businesses?

Although this case only deals with books published on a physical medium, it brings interesting perspectives as to the applicability of reduced rates to electronic books, i.e. books published in digital form and readable on the consumer’s computer(s) and/or other electronic devices.

This decision confirms the trend in ECJ case law that compliance with the principle of fiscal neutrality should be assessed against the consumer’s experience and the economic reality.

It will be interesting to watch the further developments in the pending infraction cases against Luxembourg and France over reduced VAT rates on electronic books (C-479/13 and C-502/13).

For more details and information on how PwC can support you if you have or consider a similar claim, please contact your regular PwC adviser.