European Commission consults on scrapping VAT for digital publications

The European Commission has confirmed plans for a two-month consultation regarding the future of charging VAT on digital publications and ebooks.

The move could result in EU member states being allowed to apply lower rates of VAT to ebooks, in a similar vein to printed books, with the possibility of even offering zero rates of VAT for electronically supplied publications.

Presently, EU member states have the ability to tax printed books, newspapers and publications at a reduced rate of VAT – five per cent being the minimum. Meanwhile some member states were allowed to apply VAT rates lower than five per cent, including exemptions with a deductions right of VAT to certain printed publications – known as zero rates. In the UK, books and newspapers are zero rated.

However, digital publications that are electronically distributed are still taxed at the standard VAT rate. Since the turn of last year, all telecommunications, broadcasting and electronic services incur VAT charges wherever the end user is based – known as “place of supply”.

This was designed to stop certain suppliers from benefit from being located in the member state with the lowest VAT rates.

The European Commission is seeking to get a definitive answer following the consultation – which closes on 19th September – with a view to any amendments to EU legislation by the end of the year, as part of the 2016 Actions Plan on VAT.

It has already hinted it will ‘make a legislative proposal in 2016 to allow Member States to apply to electronically supplied publications the same VAT rates that Member States can currently apply to printed publications’.

As the open public consultation seeks the views of business, the public and representative organisations, if you’d like to read the Commission’s full consultation click here.




Image: Maurizio Pesce

Last updated: 26th July 2016