In a recent judgment issued by the Court of Justice of the European Union (CJEU), the Court ruled that the EU VAT Directive does not preclude Finland from applying different rates of VAT for books supplied via different media such as printed books and E-books.
The case involved a Finnish provider of e-books and audio books using CDs, USB drives, etc. The company challenged the decision of Finland's Central Tax Board that reduced VAT rate applied to books printed on paper cannot be applied to books on other media, arguing that it was against the principle of fiscal neutrality for an EU Member State to apply a reduced rate of VAT solely to books published in paper form.
The case made its way to Finland's Supreme Administrative Court, which referred to the CJEU for a preliminary ruling.
The CJEU ruled that in such cases, the EU VAT directive does not preclude EU Member States from applying different rates of VAT as long as the principle of fiscal neutrality in the common system of value added tax is complied with. However, the Finnish Court should take into consideration how an average consumer in Finland regards printed books and books in other forms. If a consumer regards books in all forms as essentially the same, applying a reduced rate to one form and not the other is not justified.
Although the case involved only Finland, it may have impact for other countries such as Luxembourg and France, which also apply differing VAT rates for printed books and e-books.