Sunday, March 15, 2009

EU votes for e-books VAT cut

The fact that VAT is payable on digital books and audiobooks but not raised on physical ones has always been one of those seemingly silly taxation rules. Same content and it terms of ebooks the experience is exactly the same but in this case the device and the content are taxed. It often also made more difficult when physical and digital content is bundled and even if the digital rendition is ‘free’ VAT is due albeit at a reduced rate.

The Bookseller brought us some great news last week regarding the potential reduction of VAT on audio books and e-books. European Union ministers voted to allow all member states to charge the low rate VAT on books that have a "physical means of support" and now the UK Publishers Association has picked up the challenge to make it happen.
VAT rates fluctuate across the EU states with the UK making physical books zero rated but ebooks full rate at 15% whereas other countries such as Holland charge a low rate for physical books and a whooping great 19% on ebooks. Under the directive UK rates could be reduced to 5%.

A reduction in VAT rates is not an obligation; merely an option and it will be interesting to see governmental reaction across Europe.

We would like to see VAT taken off books full stop but that is highly unlikely.


Anonymous said...

Oops, surely that statement about UK VAT being at a full rate of 15% should read 17.5% ?

Anonymous said...

At the time of the posting VAT was 15% (remember Labour dropped the rate temporarily).

Now Conservative are upping the VAT to 20% so I hope they DO get around to removing VAT from eBooks... As it is, the eBook edition is information superhighway robbery... well, at least 20% of it is.

Makes me want to buy the paper book at 0% VAT and then get the ebook via... ahem, coughP2Pcough...