Monday, 21 October 2013

VAT on e-books

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.

4 comments:

Jane Hanbury said...

Very interesting article. Thank you for keeping us informed via your post :)

Helena Halme said...

Glad to be of assistance, Jane!

Chris Longmuir said...

I thought we paid the 3% Luxembourg rate on ebook sales in the UK. It was 20% originally but they managed to bring it down to the 3% rate because Amazon is based in Luxembourg

Helena Halme said...

Chris, that's right, we do now pay 3% if we publish and sell our books via Amazon. This will end when the rules come in where you have to charge in the country where the buyer is, e.i. in the UK we'd have to pay 20% VAT. If, however, EU manages to simplify the rules so that e-books in all countries carry the same rate as paper books, the rate will go down to 0%.

Clear as mud?

H ;-/