In my other job as accountant, I've recently been involved in examining in detail the VAT rules for the travel sector, where the EU is desperately trying to harmonise the taxation rates across its member states.
Much like travel, VAT on books is also charged at different rates in different countries.
In the UK e-books carry 20% VAT while print books are free of tax. In France e-books have 5.5% VAT, while in Luxembourg where Amazon is based, the VAT is charged at 3 percent.
This week, however, according todays Bookseller magazine, the European Council is going to debate the issue, with the aim of harmonising VAT on e-books across Europe.
Related to this issue is a new law coming into force in 2015 where VAT has to be charged on the level of the rate in the country where the book is sold, not in the country where the e-store is based. This will make pricing decisions more complicated for us indies, but, on the other hand, if the UK becomes VAT free for e-books, it will also reduce the price of the books for our readers.
Here's hoping that the European Council will come to the right decisions for us, and that e-books will in the future be charged at 0% rate VAT, to make them equal to print books. Because, even if e-books are generally cheaper than print books, surely there is absolutely no reason to charge VAT on the digital content if the print copy doesn't carry it?
Here's a link to The Bookseller article for those who are interested in these matters.