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European Union taxes e-books but not p-books
March 16, 2009 | 11:22 am
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By Paul Biba
My jaw dropped when I saw this article from Martyn Daniels’ Brave New World blog. In the EU VAT is charged on e-books and audio books, but not on physical books. However, there is some new legislation to alleviate part of this unfairness:
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.
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Comments:
it is not true, at least not for germany, that p-books are exempt from vat. they are taxed 7% in germany, which is the reduced rate.
In France, there’s 5.5% VAT on paper books. For e-books, if the above is true, it would be 19.6%.
European Union ministers voted to allow all member states to charge the low rate VAT on books that have a “physical means of support” – in English, this means printed books or books on CDROM, but not downloadable e-books.
In the UK, charging “the low rate VAT” on printed books would mean replacing the existing 0% rate with a new 5% rate.
In the UK all attempts to tax printed books have been met by campaigns against “a tax on knowledge”. Replacing printed books taxed at 0% with e-books taxed at 15% raises the possibility of broadening the tax base painlessly without anyone noticing. After all, ‘The art of taxation is to pluck the maximum number of feathers from the goose with the minimum amount of hissing’.
The reason that was mentioned here in The Netherlands for the high rate on e-books is the DRM that publishers put on them. This generally implies that you have a restricted right to use the book. For example there could be a time constraint on its use. Therefore `buying’ an e-book is considered a lease instead of a sale. In other words a service, and for services the high rate is used.