In December, I mentioned the UK Parliament considering and then declining to lower the UK’s 20% value-added tax (VAT) on e-books. Lowering the VAT is technically against EU law, though that hasn’t stopped countries such as France and Luxembourg from doing it.
Publishing Perspectives reports that the UK’s Publishers Association hasn’t given up, and is lobbying the European Commission to change its VAT rules so that audiobooks and e-books can be assigned the same (0%) VAT as printed books.
While [Publishers Association CEO Richard Mollet] says that “considering the explosion of e-books across the UK and elsewhere, you can’t really say it’s stifling growth,” he does acknowledge that it may have an impact in the future. And it most certainly has an impact on innovation, if only for the moment: “If you’re in your garage and come up with a fantastic new way to sell books online, you’ll move to Luxembourg before going into business,” he admits. “Of course, that too is likely to change, as in 2015, the VAT law changes to that of the buyer’s home country and not the seller’s,” meaning Apple and Amazon will lose that competitive advantage. “But three years in the e-book market is a lifetime.”
Since Amazon has located its European e-book servers in Luxembourg, it is currently able to sell e-books everywhere in Europe (including the UK) at Luxembourg’s low 3% VAT rate, which currently gives it a competitive advantage over UK-based e-book sellers.
