In Case
C-390/15 Rzecznik Praw Obywatelskich (RPO) a request was made for a preliminary
ruling on the validity of a reduced rate
of VAT in relation to the supply of digital books electronically.
The Court of Justice of the European Union held that the exclusion
of digital books, newspapers and periodicals from the application of a reduced
rate of VAT where they are supplied electronically is not contrary to the
principle of equal treatment and that the VAT Directive is valid from that
point of view.
Under the VAT Directive, EU Member States may apply a
reduced rate of VAT to printed publications such as books, newspapers and
periodicals. Digital publications, by contrast, must be subject to the standard
rate of VAT, with the exception of digital books supplied on a physical support
(for example a CD-ROM). The Polish Constitutional Court, before which a case
was brought by the Polish Commissioner for Civic Rights, doubted the validity
of that difference in taxation and asked the CJEU whether that difference is
compatible with the principle of equal treatment and whether the European
Parliament had been sufficiently involved in the relevant legislative
procedure.
In its judgment, the Court finds that the provisions of the
VAT Directive must be regarded as establishing a difference in treatment between
two situations that are comparable in the light of the objective – the
promotion of reading – pursued by the EU legislature when it permitted the
application of a reduced rate of VAT to certain types of books. The Court went
on to examine whether that difference is justified. It points out that a
difference in treatment is justified where it relates to a legally permitted
objective pursued by the measure having the effect of establishing the
difference and is proportionate to that objective. When the EU legislature
adopts a tax measure, it is called upon to make political, economic and social
choices, and to rank divergent interests or undertake complex assessments.
Consequently, it should, in that context, be accorded a broad discretion, so
that judicial review of compliance with such conditions must be limited to
review as to manifest error. Against that background, the Court observes that
the ruling out of the application of a reduced rate of VAT to the supply of
digital books electronically is the consequence of the specific VAT regime for
e-commerce. In the light of the constant developments to which electronic
services in their entirety are subject, it was considered necessary to make
electronic services subject to clear, simple and uniform rules in order that
the VAT rate applicable to them may be established with certainty and, thus,
that the administration of VAT by taxable persons and national tax authorities
is facilitated. By precluding the application of a reduced rate of VAT to
electronic services, the EU legislature spares taxable persons and national tax
authorities from an obligation to examine, for each type of those services,
whether it falls within one of the categories of services that qualify for such
a rate under the VAT Directive. Consequently, such a measure must be regarded
as being appropriate for achieving the objective pursued by the specific VAT
regime for e-commerce. Moreover, to accept that the Member States are able to
apply a reduced rate of VAT to the supply of digital books electronically, as
is permitted for the supply of such books on all physical means of support,
would effectively compromise the overall coherence of the measure intended by
the EU legislature, which consists in the exclusion of all electronic services
from the possibility of a reduced rate of VAT being applied.
As regards the obligation to consult the European Parliament
during the legislative procedure, the Court points out that this obligation
means that the Parliament is consulted afresh whenever the text finally
adopted, taken as a whole, differs in essence from the text on which the
Parliament has already been consulted, except in cases where the amendments
substantially correspond to a wish of the Parliament itself. The Court then
examines whether fresh consultation of the Parliament was necessary so far as
concerns the provision of the directive limiting the application of a reduced
rate of VAT to solely the supply of books on a physical support. The Court
holds in this regard that the final text of the provision concerned is nothing
other than a simplification of the drafting of the text which was set out in
the proposal for a directive and the substance of which has been fully
preserved. The Council was thus not required to consult the Parliament afresh.
The Court concludes that that provision of the directive is not invalid.
