Value added tax is, as a main rule, charged at a rate of 25 per cent. However, as regards sales of books, newspapers and periodicals, a reduced tax rate of 6 per cent is applied. The reduced tax rate is applied irrespective of whether such a product is provided in printed form or by electronic means.
The case concerns a subscription service which customers, for a fixed monthly fee, can access a selection of podcasts. The company which provides the subscription service applied for an advance ruling in order to find out whether the service is subject to the reduced tax rate.
The Supreme Administrative Court stated that a condition in order for a digital product in the form of audio files to be subject to the reduced tax rate for electronic publications should be that the audio files contain reproduction of text, i.e. the production of the audio file must be based on a script. The court also stated that several of the podcasts included in the company’s subscription service consist of the reading of texts aloud. The fact that the reading aloud has been enhanced by components of dialogue, sound effects, music, etc. does not prevent that the presentations are subject to the reduced tax rate. However, because the subscription service also includes podcasts in the form of non-scripted interviews and discussions the court found that the subscription as a whole was not subject to the reduced tax rate.
Read the judgment here: