An announcement from Brussels last week has brought the question of taxation and eBooks back to the surface. The European Commission made a statement on Thursday in which it announced that France and Luxembourg would be referred to the EU Court of Justice following their unlawful application of reduced rates of VAT to eBooks.
EU law regarding taxation rates are strict but clear, with tight legislation about the reduction rates of VAT on books for each Member State. However, the statement from the European Commission suggested that there would be discussions about ‘new VAT strategy’ by the end of this year, so can we expect to see changes to strict EU legislation soon?
It’s not exactly a new topic of discussion: there has been debate about the lack of VAT reduction on eBooks for quite some time now. James Bridle’s blog post two years ago highlighted the ‘idiocy’ of the inconsistency of taxation between formats, pointing out that eBooks are classed as ‘electronic guides rather than books’. While laws on taxation mean that paper books are classed as ‘life necessities’, eBooks aren’t granted the same status; do 20% VAT rates leave eBooks in the ‘luxury product’ range?
The SNE (syndicat nationale de l’edition), the French national trade union for the publishing industry, reacted to the European Commision’s statement in a press release that called for an end to ‘fiscal discrimination between paper and digital books’ and highlighted the absurdity of discrepancies in taxation between the two formats. The SNE stated that ‘like all books, an eBook is above all a work of the mind: it’s defined by its content and not by its format’ and pointed out that ‘the three countries with the most developed digital book markets (United States, Japan, Korea) have VAT levels for eBooks that are lower or equal to those for paper books’.
This week’s events seem to clearly show that out of date tax laws need to be revised to keep up with a rapidly changing publishing industry. I certainly am looking forward to seeing what will come from the EU’s promised discussions about VAT strategy – at a time where the UK’s position in the EU is being widely discussed, perhaps the UK publishing industry could profit from leaving the EU if there is little change to VAT legislation in coming months. Time well tell…