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EU consultation on ending VAT on eBooks

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Newsletter issue - September 2016.

The future of the chargeable rate of VAT on digital publications and eBooks is under review as the European Commission (EC) has launched a two-month consultation with a view to abolishing the current full rate VAT.

Member States currently have the option to tax printed books, newspapers and publications at a reduced rate (minimum 5%) and some Member States were granted the applications of VAT rates lower than 5% (super-reduced rates) including exemptions with a deductions right of VAT at the preceding stage (so called zero rates) to certain printed publications. Digital publications that are electronically supplied have to be taxed at the standard VAT rate.

Until 2015, there was a need for a harmonization of VAT rates for electronically supplied services and in particular electronically supplied publications, but since 1st January 2015, with the entry into force of new 'place of supply' rules, 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.

While acknowledging the differences between printed and electronically supplied publications with regard to the format, they offer the same reading content for consumers and the VAT system needs to keep pace with the challenges of today's digital economy.

The objective of the consultation is to seek the views on:

  • the commitment by the Commission in its 2016 Actions Plan on VAT to:
    • allow Member States the application of reduced rates for electronically supplied publications; and
    • allow Member States the application of super-reduced and zero rates for electronically supplied publications;
  • the definition and scope of electronically supplied publications; and
  • the potential impacts of reduced rates for electronically supplied publications.

The consultation period runs from 25 July 2016 to 19 September 2016.

Further information on the consultation can be found here.