French book-pricing rules: Toward a French VAT based on the presence or absence of DRM?

Update November 15, 2013. Socialists Deputies, at the request of government, have deleted the amendement imposing a full VAT rate on all digitally-restricted books. The French Finance Act will be examined now by the French Senate. We hope that the amendment will be submitted again at that time.

Update November 14, 2013: the amendment was withdrawn in the Finance Committee then submitted again for the public session under the number II-22 [FR]. This amendement was adopted on Thursday November 14, 2013 during the public session at French National Assembly. The French Finance Act will be examined now by the French Senate.

Late October 2013, Deputies Alauzet and Sas submitted an amendment [FR] to the French Finance Act, imposing a full VAT rate on all digitally-restricted books1.

In France at present, all books, whatever their medium, are subject to a reduced VAT rate. The deputies propose to draw a distinction between two types of books: those over which the buyer has full ownership, and those which only allow consumers limited rights. In this context, a consumer has "full ownership" over books which are released in an open format, without DRM, and which provide the user with the same rights as paper books (such as the possibility to lend, to read wherever and as many times as desired, etc.) Only this first, “full ownership” type of book would be treated as a true book, and would in turn be eligible for the reduced VAT rate.

This amendment reiterates an idea that was expressed previously by Deputy Isabelle Attard [FR] in the Cultural Affairs Committee of the Assembly.

Here is the text of the amendment :

I. – Article 278-0 bis A(3) of the Code général des impôts (General Tax Code) is complemented by the following phrase: “except if the file(s) include technical protection measures, as defined by article L331-5 of the Code de la propriété intellectuelle (Intellectual Property Code) or if they are not in an open format, as defined by Article 4 of the Loi n° 2004-575 pour la confiance dans l'économie numérique (Trust in the Digital Economy Act) of 21 June 2004.”

II. – The present article shall apply as of 1 January 2015.

The amendment is scheduled for discussion in the Finance Committee in the coming days.

  • 1. In France, book-pricing is regulated. The price is fixed by the editor and a retailer may not offer a discount exceeding 5% of that price.