On September 8, 2016 on the website of the Court of Justice of the European Union (CJEU) the opinion of Advocate General Kokott in Case C‑390/15 Rzecznik Praw Obywatelskich (RPO) (ECLI:EU:C:2016:664) was published.
The VAT law in force in the EU permits Member States to grant a tax advantage for the sale of books and also of newspapers and periodicals. However, this applies, without restriction, only to printed editions. The Member States may apply a reduced tax rate for sales of these, an advantage that is largely denied to digital editions.
By its request for a preliminary ruling, the Trybunał Konstytucyjny (Polish Constitutional Court) questions the validity of the reduced rate of VAT for books and other publications, as provided for under EU law. The focus of the examination by the Court of Justice will be the issue of the obligations that the principle of equal treatment imposes on the EU legislature in the context of VAT legislation and the issue of the extent to which those requirements were also met in the case of the reduced rates of tax for books, newspapers and periodicals.
The dispute in the main proceedings and the proceedings before the Court of Justice
· In the view of the Rzecznik Praw Obywatelskich (Commissioner for Civic Rights), the difference in the taxation of identical publications which is to be assessed under Polish law infringes the principle of equal treatment in tax matters as arising from the Polish constitution. The Commissioner accordingly applied to the Trybunał Konstytucyjny (Constitutional Court) for an examination as to the constitutionality of the Polish provisions relating to the reduced tax rate for publications.
· The Constitutional Court regards the Republic of Poland as being compelled, on the basis of the provisions of the VAT Directive, to apply the standard rate to electronically supplied books and other electronic publications. However, it questions whether the corresponding provisions of the VAT Directive are valid. First, during the legislative procedure for the adoption of Directive 2009/47, on which the current version of point 6 of Annex III to the VAT Directive is based, the text of the Directive was substantially altered after the European Parliament had been consulted. Secondly, the Constitutional Court takes the view that the exclusion of the application of a reduced tax rate to electronic publications that are downloaded as a file via the internet or supplied by the so-called ‘streaming’ method is inconsistent with the principle of fiscal neutrality, which, in matters relating to value added tax, reflects the principle of equal treatment.
· On 20 July 2015 the Constitutional Court accordingly submitted the following questions under Article 267 TFEU:
1. Is point 6 of Annex III to the VAT Directive 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 the VAT Directive, 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 books published in digital format and other electronic publications?
· In the proceedings before the Court of Justice, the Polish Commissioner for Civic Rights, the Prokurator Generalny (Polish General Public Prosecutor), the Hellenic Republic, the Republic of Poland, the Council of the European Union and the European Commission submitted written observations on these questions. The Polish Commissioner for Civic Rights, the Republic of Poland, the Council and the Commission took part in the hearing held on 14 June 2016.
Conclusion
The Advocate General proposes that the Court should give the following reply to the questions referred:
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.
For further information click here to be forwarded to the text of the opinion as published on the website of the CJEU, which will open in a new window.
Did you know that in our section CJEU Rulings we have made a selection of rulings of the CJEU? We have organized these rulings based on the subject they relate to (e.g. Freedom of establishment, Free movement of capital, Indirect taxes on the raising of capital, etc).
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