Various VAT developments September 2014

Updates from the Americas, Asia Pacific, and EMEA regions.

Features of this edition include updates from China on a number of VAT and customs developments and the potential for significant VAT claims in Denmark based on the ATP PensionService case.

The CJEU has delivered its judgment in the Finnish case of K Oy about the VAT treatment of books supplied on ‘alternative’ carrier mediums (i.e., CDroms, USB sticks, memory cards, etc.). The Court has decided that EU law permits different VAT treatments for paper books and those on different carrier mediums – provided that this does not breach the principle of fiscal neutrality (which depends on the views of an ‘average consumer’).

Given increasing sales of e-publications, a number of EU Member States have been considering the VAT rates applicable to e-publishing, with some inconsistency in the approach taken. For example, the European Commission has referred France and Luxembourg to the CJEU for applying a reduced VAT rate to e-books, which the Commission considers cannot benefit from a reduced rate.

In Germany, the government is reducing the VAT rate on audio books and would like to see a reduction in the VAT rate applicable to e-books at EU level. And in the UK, the tax authorities’ current approach, which treats physical books as zero-rated but e-books as subject to the standard rate of VAT, is being challenged.

This is certainly an ongoing issue, especially with the upcoming 2015 place of supply changes, and we will keep you updated on developments in future editions of this newsletter.
Various VAT developments September 2014