Electronic books in France: No differential VAT based on the presence or absence of DRM

The French Finance Bill could have been a milestone toward recognising that consumer's rights are indeed restricted by the digital handcuffs referred to as DRM or, deceptively, “technical protection features”1. Unfortunately, the Government decided otherwise, with some help from the socialist deputies.

Deputies of the Green party (Europe Écologie-Les Verts) had introduced an amendment [fr] to the Finance Bill, imposing a full VAT rate on all digitally-restricted books.

In France at present, all books, whatever their medium, are subject to a reduced VAT rate. The deputies had proposed 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.

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 was adopted by the National Assembly against the Rapporteur's opinion, and against the Government's as well, at the open session of Thursday 14 November 2013, the minutes of which are available [fr]. Their argument was that it would possibly weaken the French stand in negotiations with the European Commission, aiming to extend the reduced VAT rate to all e-books. Deputy Isabelle Attard subsequently published a response to that argument [fr].

The Government announced its intention to have the amendment voted again. To that effect, the Government proposed an amendment removing the provision [fr] that had been introduced by the first vote. On Friday 15 November, the socialist deputies answered the call and voted for the removal of the amendment establishing a differential VAT on e-books, based on the presence or absence of DRM.

Once again, the Government is arguing of an alledged legal risk, to hide its lack of political determination in fighting systems that lock in and trap customers. The same thing happened during the debates on prioritisation of Free Software in education and universities. The Government had mentioned legal issues in the implementation of a legal provision giving priority to Free Software in administrations. At the time, the Government had never substantiated this claim, and we had published an analysis to the contrary [fr].

This legislative episode does not speak highly of the Government and the socialist deputies who, within twenty-four hours of voting for the provision, voted for its removal. Yet, it shows once more that the Government is choosing not act against locked systems, following its predecessor in that.

The complete Finance Bill is scheduled for open vote on Tuesday, 19 November. Later on, it will be examined by the Senate. We do hope the amendment is introduced again on that occasion.

• 1. Digital Restrictions Management (DRM) is the practice of imposing technological restrictions that control how users can access digital media and what they can do with them. For further information, please refer to our overview on DRM [fr] or www.defectivebydesign.org.