Saturday, March 21, 2015

EU Approach to eBooks Is Nonsense

This week four cultural ministers from four powerhouses; Italy, Poland, France and Germany jointly requested that the EU Commission should think again about the rate of tax for ebooks. This comes only weeks after the EU High Court ruled against France and Luxemburg and stated that ebooks are different from physical books. They want the same rate applied as physical books so countries such as the UK would have zero tax on both, as opposed to zero on physical and 20% on digital. 

We all recognise that Western Europe is a block of democratic free trading nations with significant economic and political clout. The challenge is often getting that balance between local national interest and collective European interest. If it veers too far to one side it becomes unable to change and what change takes place is often slow and bureaucratic. If it moves too far to the other side it loses its core strength of collective responsibility and benefit.

Taxation is a classic battleground where individual countries raise their own taxes and spend them locally contributing a hefty sum to the Union based on their often perceived ability to pay. So we have as many different rates of tax as there are countries and as many ways of allocating these as there are politicians and ideology. So what has this to do with Digital Media and technology?

Anyone looking at the different tax rates across Europe would think that someone has made trade less attractive not more attractive. Anyone looking at the tax difference between the digital and physical book would think that someone must have made a mistake and just forgotten to correct it.

One of the greatest challenges the European media industry faces is getting the unelected commission and courts to realise that the world has gone digital and that in doing so has created new opportunities not threats. This taxation rule is a daft as the current lack of real action to address the tax avoidance plays being made by multinationals. It is matched by the lack of a rights and IP database. The inability to resell digital goods because….

The balance between common sense and nonsense, micro control and macro control, controlled migration and mass migration are challenges the EU must rise to but repetitively fail to address.
But it would be good if we could just have the simple understanding that a book is a book is a book. The price may vary from one form to another but the way the governments view it and the tax they levy against it should be consistent across all formats.    

Related Material:

WJS:EU Court Rules E-Books AreServices, Not Goods

1 comment:

Inkling said...

The EU was supposed to make trade across borders easier. The VATs on ebooks make it a mess. The VATs on them vary from 3% to 25% and because those taxes are taken out of the retail price (rather than added on afterward) it means the retail price has to vary between countries if an author and publisher are going to get anything close to the same return on each sale.

Making matters worse, companies such as Amazon and Apple typically impose pricing only in x.99 increments. That it impossible to match prices to VAT closer than a full Euro, current just over a dollar.

The book versus ebooks conundrum isn't even as ridiculous at that for audiobooks. Audiobooks often get the lower book rate if shipped on physical media (cassette or CD) but the higher ebook rate if sent over the Internet. Since what's being purchases is the same digital file, that makes even less sense.

Hopefully, in the next year or two the EU will straighten this mess out.