92002E1553

WRITTEN QUESTION E-1553/02

by Roberta Angelilli (UEN) to the Commission

(3 June 2002)

Subject: Taxation of music CDs

For some years now in Italy the rate of VAT on intellectual works such as books has been 4 %, rather than the general rate of 20 % which applies to all other goods, the aim being to protect such works of intellectual production. However, if books and magazines are considered cultural goods, this is not the case for music CDs and cassettes or CD-ROMs, which are considered luxury goods and are therefore subject to the 20 % VAT rate. This presupposes that words automatically become a product of major cultural importance as soon as they are written down on paper. In addition, certain CDs qualify for the 4 % VAT rate simply because they are sold in a joint package with magazines at newspaper kiosks. It is obvious that a lower rate of VAT on CDs would create a remarkable development opportunity for undertakings in that sector, especially given their problems in the face of the current Europe-wide CD pirating epidemic. To give CDs and other forms of musical reproduction the status of intellectual products would also be a suitable gesture of recognition for an important industry which must be considered part of the cultural production sector.

Can the Commission state whether any studies or documents exist or are in preparation on the possibility of reducing taxation rates on musical products and bringing those rates into line with those applying to books?

Answer given by Mr Bolkestein on behalf of the Commission

(10 July 2002)

In accordance with the Community legislation concerning VAT rates at present in force, and in particular Article 12 of the sixth VAT Directive 77/388/EEC(1), the standard rate applies as a rule to all taxable transactions.

Member States who so wish may nevertheless apply a reduced rate of not less than 5 % of the taxable amount, but solely for goods and services in the categories included in Annex H of the above Directive. Books, newspapers and periodicals are covered by this Annex, but not CDs, cassettes or CD-ROMs.

Some provisions of this same Directive derogate from these rules (Article 28(2)) and allow the Member States to continue applying a lower rate than the minimum rate of 5 %, under certain conditions, during the period of application of the transitional arrangements. Such a rate had to be in force already on 1 January 1991. That is how Italy managed to maintain a rate of 4 % on books.

Owing to the dangers of distortions in competition, the scope of these temporary derogations cannot be extended. Consequently, the only possibility which could reasonably be envisaged would be to extend the scope of the reduced rates in order to include these cultural goods. This question of extending the scope of the reduced rates to other goods forms part of the more general revision of certain aspects of the arrangements, scheduled for 2003.

(1) OJ L 145, 13.6.1977; Directive last amended by Council Directive 2002/38/EC of 7 May 2002, OJ L 128, 15.5.2002.