A key EU Parliamentary committee has changed its attitude toward harmonising VAT rates on e-books and paper books. Are there any useful tips to take advantage of?
Change of attitude.
In June 2015, France and Luxembourg lost a hearing in the Court of Justice of the European Union to maintain their reduced rates on e-books.
Following this, the Economic and Monetary Affairs Committee of the European Parliament has backed a proposal drawn up by the European Commission to reduce VAT on electronic books to the same rates as their paper equivalent.
The measure was approved by the full EU Parliament on 1 June 2017, so this could mean that e-books will be zero-rated in the UK before the end of the year, once a new directive is passed.
Under the Principal VAT Directive, member states may apply a reduced rate of VAT to printed publications such as books, newspapers and periodicals. However, digital publications must be subject to the higher rate, with an EU minimum standard rate of 15%. The only exception is digital books supplied on a physical medium, such as a CD-ROM.
Only goods specifically listed in the EU VAT Directive Annex II may enjoy reduced VAT rates in the 28 member states. However, this list was drawn up before the widespread adoption of e-books.
If you do not reclaim input tax – for example because you use the flat rate scheme, consider delaying large purchases of material until the final decision is known; it may say you money to wait.