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Top Euro court ends mega ebook VAT slash in France, Luxembourg

Too bad for Amazon, eh?

Your Kindle purchases are about to get dearer following a decision by the European Court of Justice (ECJ) that France and Luxembourg can no longer charge a reduced rate of VAT for ebooks.

Both France and Luxembourg set reduced rates of value-added tax for ebooks in 2012, and the European Commission took issue with this, hence the court case. France had been charging 5.5 per cent VAT and Luxembourg just 3 per cent on the supply of electronic books.

Amazon's European headquarters are in Luxembourg City.

Under the VAT Directive, countries can give a reduced rate of tax to “the supply of books ... on all physical means of support”, but the court decided that eBooks did not include a “physical medium”, saying instead that eBooks constitute an “electronically supplied service” rather than “goods”. Essentially, this confirms the EU regulations allowing member states to set lower rates of VAT only apply to printed books.

New VAT rules that came into force at the beginning of the year may already have superseded the problem, however, as VAT must now be charged at the rate in the buyer’s country, rather than the rate where the downloading servers are located. ®

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