Flashback on ECJ Cases – C-390/15 (RPO) – No reduced VAT rate for the delivery of digital books by electronic means

On March 7, 2017, the ECJ issued its decision in the case C-390/15 (RPO).

Context: Reference for a preliminary ruling — Taxation — Value added tax (VAT) — Directive 2006/112/EC — Point 6 of Annex III — Validity — Procedure — Amendment of a proposal for a Council directive after the Parliament has given an opinion — No fresh consultation of the Parliament — Article 98(2) — Validity — Reduced rate of VAT precluded from being applied to the supply of digital books electronically — Principle of equal treatment — Comparability of two situations — Supply of digital books electronically and on all physical means of support

Article in the EU VAT Directive

Article 98(2) of the EU VAT Directive 2006/112/EC.

Article 98 (Reduced rates)
1. Member States may apply either one or two reduced rates.
2. The reduced rates shall apply only to supplies of goods or services in the categories set out in Annex III.
The reduced rates shall not apply to electronically supplied services with the exception of those falling under point (6) of Annex III.
3. When applying the reduced rates provided for in paragraph 1 to categories of goods, Member States may use the Combined Nomenclature to establish the precise coverage of the category concerned.

Facts

By application lodged on 6 December 2013, the Commissioner for Civic Rights requested the Trybunał Konstytucyjny (Constitutional Court, Poland) to rule that (i) items 72 to 75 of Annex 3 to the Law on VAT, read in conjunction with Article 41(2) thereof, and (ii) items 32 to 35 of Annex 10 to that law, read in conjunction with Article 41(2a) thereof, do not comply with the Polish constitution in that those provisions lay down that the reduced rates of VAT are to apply only to publications made available on a physical support, to the exclusion of publications transmitted electronically.
In the course of the main proceedings, the Marszałek Sejmu Rzeczypospolitej Polskiej (Speaker of the Lower House of the Parliament of the Republic of Poland) and the Prokurator Generalny (General Public Prosecutor, Poland) stated that, since the provisions of Polish law at issue were adopted in order to transpose Article 98(2) of Directive 2006/112 as amended and point 6 of Annex III thereto into domestic law, the Polish legislature could not depart from those provisions without infringing its obligations under EU law. The same view was taken by the members of the Polish Government invited by the national court to express their opinion in the case.
The national court considers that there are, however, reasons to doubt that those two provisions of Directive 2006/112 as amended are valid.
First, that court observes that Directive 2009/47, from which point 6 of Annex III to Directive 2006/112 as amended stems, could be vitiated by a procedural defect, since that point differs in its wording from the text of the proposal for a directive which had been submitted to the Parliament.
Secondly, it considers that Article 98(2) of Directive 2006/112 as amended, read in conjunction with point 6 of Annex III thereto, could be contrary to the principle of fiscal neutrality. Whilst digital books made available on a physical support and those transmitted electronically have similar properties and meet the same consumer needs, Article 98(2) permits a reduced rate of VAT to be applied only to the supply of digital books on a physical support.

Questions

(1) Is point 6 of Annex III to Directive 2006/112 as amended invalid on the ground that, during the legislative procedure, the essential formal requirement of consultation with the European Parliament was not complied with?

(2) Is Article 98(2) of Directive 2006/112/EC as amended, in conjunction with point 6 of Annex III to that directive, invalid on the ground that it infringes the principle of fiscal neutrality to the extent to which it excludes the application of reduced tax rates to electronic books and other electronic publications?

AG Opinion

Examination of the questions referred has disclosed no factor capable of affecting the validity of point 6 of Annex III to Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax, as amended by Directive 2009/47/EC.

Decision

Examination of the questions referred for a preliminary ruling has disclosed no factor of such a kind as to affect the validity of point 6 of Annex III to Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax, as amended by Council Directive 2009/47/EC of 5 May 2009, or of Article 98(2) of that directive, read in conjunction with point 6 of Annex III thereto.

Summary

No reduced VAT rate for the delivery of digital books by electronic means.

Consideration of the questions referred has disclosed no factor of such a kind as to affect the validity of point 6 of Annex III to the VAT Directive or of Article 98(2) of that directive, read in conjunction with point 6 of the Annex III therewith.

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