MEPs vote to reduce VAT on ebooks to match printed rates

The European parliament has voted in favour of allowing member states to reduce the chargeable rate of VAT on ebooks to match printed book rates

The EU Parliament passed the proposal by 590 votes to 8, with 10 abstentions.

Currently, ebooks are charged at an EU minimum standard VAT rate of 15% but EU member states are able to charge the reduced VAT rate of 5%, or in some cases zero rates, in the same way as printed books, and print magazines and newspapers.

Tom Vandenkendelaere, rapporteur, said: ‘Our way of reading has rapidly changed over recent years. Now, it makes no sense to apply a double standard whereby an online newspaper is taxed higher than a printed one you buy in a shop. This new directive will give Member States the option to align VAT on digital content with printed matter.’

Now the decision will need to be reviewed by members states before implementing any possible changes to the current VAT rates.

Alan Peace, VAT partner at Blick Rothenberg, said: ‘The newspaper and book industry, not to mention Kindle and other suppliers of ebooks, will be waiting with baited breath to learn what the UK government decides to do on this issue.

‘There are a number of possible scenarios; to reduce the VAT on ebooks to zero, reduce the VAT on ebooks to 5% but at the same time increase the VAT on printed books to 5%, or simply leave the rate for ebooks at 20%.’

Since 1 January 2015, 'place of supply' rules have been in force, which means that VAT on all telecommunications, broadcasting and electronic services is levied where the customer is based, rather than where the supplier is located. Suppliers can therefore no longer benefit from being located in the member state with the lowest VAT rates, for example, basing themselves and billing out of Luxembourg as in the case of Amazon.

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