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According to this article EU court decided that e-books should not benefit from tax reductions that are applied to physical books:

E-books must be subject to the full rate of value-added tax (VAT), and European Union countries may not extend tax exemptions for books to include ebooks, the EU’s highest court ruled Thursday, adding that it considers downloadable ebooks to be services.

Most EU member states, with the exception of Bulgaria and Denmark, impose a lower rate of VAT on physical books than on other products and services. The lower rate for books is one of a limited number of exemptions allowed under the EU’s VAT Directive.

This differentiation seems as physical books have various disadvantages over e-books (or e-books have various advantages over physical books):

  • environmental issues - this article tells us about the environment impact of paper. Some effects are mitigated, but producing an e-book seems to be more environmental friendly than producing one on paper. This is somehow contradictory to environmental policy of EU which place great value on protecting the environment
  • logistic costs - it is way easier to have an e-book transmitted to the client, since there is not need for physical transportation, storage etc.
  • extra services - electronic format is much more versatile (read on virtually any device) and can even allow for books updates after publication

Question: Why does EU seem to disfavor e-books when compared to physical books?

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    "electronic format is much more versatile (read on virtually any device)" - isn't this a bit of a strawman once we consider that the alternative to "virtually any device will do" is "no device is required in the first place"? – O. R. Mapper Apr 28 '18 at 20:18
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    Also, while it may be only tangentional for the question at hand: "can even allow for books updates after publication" - at least my personal enthusiasm about this "advantage" is decidedly mixed. – O. R. Mapper Apr 28 '18 at 20:21
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    E-Book readers need oil (which is non-renewable) for plastic parts. Producing accumulators is dirty. Sure, producing paper is bad, but I wouldn't place a bet that E-book readers are better, until there was a credible, quantitative study that shows exactly that. And electronic devices break or stop working, so over the years, you likely need multiple. A good book easily lasts hundreds of years without needing replacement. Over longer time periods (one or even multiple lifetimes), books might still be more environmentally friendly. Plus, they decompose completely, unlike E-Book readers. – Polygnome Apr 28 '18 at 23:33
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    environmental issues - this article tells us about the environment impact of paper not to be devil's advocate, but just for maximum fairness you ought to find another that details the environmental impact of manufacturing electronic devices and infrastructure needed to deliver, distribute and preserve e-book, keeping in mind that this cost is to be integrated over time due to replacement and maintainance instead of being essentially constant as for that of a wooden shelf :) – Tobia Tesan Apr 29 '18 at 10:37
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    @TobiaTesan That still does not address the problem that paper books are 100% renewable (or at least, can be produced 100% renewable) whilst E-Books use up limited resources. – Polygnome Apr 29 '18 at 11:38
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You're referring to a court ruling, not a political decision. A court does not decide on policy, it must apply the existing law.

The applicable law is the EU VAT Directive (Directive 2006/112). As originally written in 2006, clause III.6 stated that states may apply a reduced VAT rate to

(6) supply, including on loan by libraries, of books (including brochures, leaflets and similar printed matter, children's picture, drawing or colouring books, music printed or in manuscript form, maps and hydrographic or similar charts), newspapers and periodicals, other than material wholly or predominantly devoted to advertising;

In 2009, the wording was amended by Directive 2009/47 to

supply, including on loan by libraries, of books on all physical means of support (including brochures, leaflets and similar printed matter, children’s picture, drawing or colouring books, music printed or in manuscript form, maps and hydrographic or similar charts), newspapers and periodicals, other than material wholly or predominantly devoted to advertising

The court's 2015 ruling explains (in more detail than the press release) that since the law explicitly limits the clause to books delivered on physical means of support, and another clause explicitly states that the sale of electronic services is subject to the ordinary VAT rate, the law cannot be applied to the sale of e-books. A similar 2017 ruling upholds this interpretation.

The rationale given for the 2009 change in wording is that

Category 6 (books, etc.): The current wording covers only books on paper support. For reason of neutrality, an extension is necessary in order to also cover books that are on CD, CD-ROMs or any similar physical medium that predominantly reproduce the same information content as printed books. Thus, only recordings that fundamentally reproduce the written text in a book are covered. A recording that includes supplementary material such as games, search functions, links to other material and similar, apart from the text read aloud, continues to be subject to the normal VAT rate.

It is strange that a change of wording on the rationale that what counts is the information content and not the delivery medium explicitly limited the clause to delivery on physical medium. I can't find any discussion of this matter (but I did not search through any parliament or commission transcripts to see if there ever was a debate on this topic).

Several EU countries (including France which now argues for lower VAT on ebooks) have a public policy of favoring dedicated bookstores with competent vendors over remote sales and bestseller sales at magazine stands. It's possible that restricting the lower VAT to physical books only was done as part of this policy (since ebook sales would never benefit bookstores), but this is pure speculation on my part. It's also possible that nobody was thinking of ebooks when writing this directive: in 2009, they were still a pretty niche market (I don't have figures for the EU, this site states that only 2% of the US reading population had an e-book reader in 2009). It was also uncommon in 2009 to consider environmental benefits outside energy consumption and direct pollution, and it is still far from systematic even in the EU to take environmental impact into account when economic matters are at stake, so your ecological arguments would not have been prominent in any political discussion about e-books vs paper books. (Plus electronic devices and their energy consumption aren't green either.)

According to VATlive, there now seems to be a consensus to amend the directive to include e-books in the lower VAT rate. A proposal was made in 2016, and has been blocked so far only because it was tied to other changes that were not consensual.

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    "Several EU countries […] have a public policy of favoring dedicated bookstores with competent vendors over remote sales and bestseller sales at magazine stands" – This is completely off-topic, but reminds of one of the greatest door signs I ever saw (it was outside a book shop): "Our rest rooms are for our customers only. If you are not a customer, why don't you go shit on Amazon?" – Jörg W Mittag Apr 28 '18 at 16:36
  • "You're referring to a court ruling, not a political decision. A court does not decide on policy, it must apply the existing law." Right, meaning it was a political decision (a law). – Lightness Races in Orbit Apr 29 '18 at 11:35
  • @LightnessRacesinOrbit a law written when X did not exist is not really a political decision about X. – Federico May 3 '18 at 10:39
  • @Federico: Yeah, don't get me wrong, I agree with the spirit of this answer and the vast majority of its content. – Lightness Races in Orbit May 3 '18 at 10:53

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