e-books

UK last major supporter of higher VAT rates on e-books

UK last major supporter of higher vat rates on e-books

France, Germany, Italy and Poland have called on the European Union to allow the EU member states to levy a reduced rate tax on e-books, to match that charged on physical copies. As many countries try to build their digital economy a lower VAT on e-books is a good step forward.

France currently charge 5.5% VAT on e-books whereas the UK charge their standard rate of 20%. However in a court ruling in the last few weeks it was declared that France and Luxembourg were breaking the EU VAT directive by charging their reduced rates on e-books and it has now been ruled that they must increase this to their standard VAT rates. Continue Reading

Court rules in favour of higher VAT rate on e-books

Court rules in favour of higher VAT rates on e-books

The UK and Germany pressured the European commissions (EC) to challenge the reduced VAT rates currently charged by Luxembourg and France on e-books, matching what they charge in printed copies, whereas the UK and Germany charge 0% and 7% respectively on printed books but charge their standard rates of 20% and 19% on e-books.

Under the EU VAT directive countries are allowed to levy a reduced or 0% rate on printed books. However it didn’t have an official on ruling e-books, which implies that the countries standard rates should be applied. However France and Luxembourg decided to go against this and treat e-books the same as printed copies, with Italy and Malta also joining them later on.

However after being pushed by the UK and Germany for a decision the European court of justice has ruled that e-books do not have the same characteristics of printed books and therefore cannot be subject to the same reduced rate. Meaning e-books are liable to the standard VAT rate in EU states, this is on the basis that it is a service and hence not listed in the EU directive as being subject to reduced rates.

This ruling means that France and Luxembourg now have to increase the VAT charged on e-books, with France making the change affective from 1 Jan 2016, and Luxembourg making the change from 1 May 2015.