During the Economic and Financial Affairs Council, held the 2 of October 2018, the European Council agreed on reducing the VAT on digital publications, a welcomed move by the publishing industry.
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For years, books and ebooks (digital publications) have been treated differently. While books have a reduced VAT, lower than the regular one applied to most products (the lowest standard VAT starts at 17% and the highest is 27%), ebooks don’t have this reduced VAT applied, forcing publishers to sell ebooks at higher prices or make less money per sale due to higher tax.
But not anymore. The European Council decided, the 2nd of October 2018, to allow member states to apply this reduced VAT to electronic publications too, thus aligning the price. The main reason behind the approval of this proposal is the need of further harmonization between member states, contributing to the EU’s “digital single market” plan.
There is no need to wait longer anymore, as the European Council is the last step in legislation-making. After the European Commission proposes new legislation and the European Parliament approves it, the European Council is the last one needing to vote and approve said text. This can sometimes take a long time and be difficult, taking in account 28 different countries have to approve the new texts. In this case, this new directive will be temporary, as the EU works on a new, more flexible VAT system.
This new directive will now allow member states to apply, if they want, this reduced rate to digital publications too. In some cases, and if they are already applied to paperbacks, member states can also apply a “super-reduced” or even zero rates to digital publications.
Obviously, DRSC Publishers welcomes this move, and hopes all 28 current EU member states will decide to apply this new directive.
The European Commission’s press release is available here.
The European Council’s press release is available here.