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VAT rates for e-books

Update on EU plans for reduced VAT rates for e-books

Ryan Bevan 16 November 2016 No comments


Further to the European Commission’s Action Plan on VAT a public consultation on reduced VAT rates for e-books and other electronically supplied publications was held earlier this year. The Commission has now published a report summarising the responses received.

862 responses were received in total. 50% were from readers, 251 responses were from businesses and organisations, 107 were from authors and 5 from Member States.

The Commission noted that the responses did not differ significantly between the different groups of respondents. The main findings were as follows:


  1. 94% of the respondents agreed that Member States should be allowed to apply a reduced VAT rate to e-books
  2. 88% of the respondents agreed that Member States should be allowed to apply a reduced VAT rate to e-newspapers and e-periodicals, too
  3. A plurality of respondents (45%) found that super-reduced and zero rates for printed publications should not be abolished. Out of these 45%, an overwhelming majority (90%) was in favour of allowing all Member States to apply super-reduced or zero VAT rates to printed publications and e-publications


Stakeholders were also asked about the effects they expected from a reduction of VAT rates and their responses indicated that:


  1. For e-books, prices go down, either by the amount the VAT is reduced (45%) or less than the amount the VAT is reduced (39%)
  2. For e-newspapers and e-periodicals prices go down, either by less than the amount the VAT is reduced (42%) or by the amount the VAT is reduced (32%)
  3. If the VAT cuts are not fully passed on to final consumers, profit margins for publishers would increase; the sector would, in the case of books, invest in new content (47%) and, in the case of newspapers, not only invest in new content (42%), but also be less dependent on advertising revenue (41%)
  4. In case prices for e-publications fall, consumers would buy roughly the same amount of printed books, but buy more e-books (46%) and some consumers would switch from printed to e-newspapers/e-periodicals (40%)


In response to questions on whether the introduction of reduced VAT rates for e-books would increase the administrative burden for business a 12% share of the businesses see such an increase with regard to e-books and 6% with regard to e-newspapers and e-periodicals.

However, the large majority (around 68%) of the businesses do not expect an increase in administrative burden. Of those businesses that commented further there was near unanimity that they would face a lesser administrative burden with regard to bundle sales, and some also mentioned the challenge of complying with diverging VAT rates, particularly for smaller businesses.

It is clear that there is widespread support for a reduction in the VAT rate charged on e-publications.  However it is worth noting that not all Member States apply reduced rates to printed publications so it is unlikely that those countries would introduce a lower VAT rate for e-publications than is currently applied to printed ones.

Also use of the wording that a reduced rate “should be allowed” would seem to indicate that this would be an optional measure so it will be interesting to see, if implemented, which countries take up the option. This could therefore result in less harmonisation across the EU.

Interested parties should watch out for further developments on this issue from the Commission as well as updates on our blog and Twitter feed.

The full report is available to view here.