The European Commission has initiated the second step in infringement proceedings against France and Luxembourg over VAT rates applied to e-books. Since 1 January 2012, France and Luxembourg have applied a reduced rate of VAT to e-books, which according to the Commission, is incompatible with the current rules under the VAT Directive. The Directive treats e-books as electronically supplied services, and therefore the application of a reduced rate to this type of services is excluded.

The Commission has acknowledged the different treatments being applied to e-books and printed books and has asked Member States to put forward proposals before the end of 2013 as part of the new VAT Strategy initiative (see IP/11/1508). In the meantime, however, the Commission says that it intends to apply the VAT rules currently in place under the VAT Directive.

The Commission has therefore issued reasoned opinions to France and Luxembourg. This is the second stage in the infringement procedure following the letters of formal notice sent in July 2012. The two Member States have one month in which to bring their legislation into compliance with EU law. Otherwise, the Commission may refer the matter to the European Court of Justice.

Further details are available on the Europa website - http://europa.eu