VAT rates for eBooks 2020

Jan 3, 2020 | Digital Services, VAT Updates

Since the European Council agreed to allow member states to apply a reduced VAT rate to electronic publications in October 2018 (1), VAT rates for eBooks have changed fast in EU countries. 2019 witnessed several VAT rate updates for e-publications where numerous countries have reduced the levy on eBooks.

In this new year 2020 new countries started or are planning to apply a reduce rate for eBooks.

Country Previous rate New rate Date
Austria 20% 10% 1 January 2020
Czech Republic 21% 10% 1 April/May 2020
Germany 19% 7% 1 January 2020
Netherlands 21% 9% 1 January 2020
Spain 21% 4% 23 April 2020
United Kigdom 20% 0% 1 December 2020

In addition to the countries that have or will introduce a reduce VAT rate on eBooks, there are other countries that have already established the same approach back in 2019. Find below these countries and the applicable VAT rate.

Country Previous rate New rate Date
Belgium 21% 6% 1 April 2019
Croatia 25% 5% 1 January 2019
Finland 24% 10% 1 July 2019
Ireland 23% 9% 1 January 2019
Luxembourg 17% 3% 1 May 2019
Malta 18% 5% 1 January 2019
Norway (non-EU) 25% 0% 1 July 2019
Poland 23% 5% 1 November 2019
Portugal 23% 6% 1 January 2019
Sweden 25% 6% 1 July 2019

 

Scope: Supply, including on loan by libraries, of books, newspapers and periodicals either on physical means of support or supplied electronically or both (including brochures, leaflets and similar printed matter, children’s picture, drawing or colouring books, music printed or in manuscript form, maps and hydrographic or similar charts), other than publications wholly or predominantly devoted to advertising and other than publications wholly or predominantly consisting of video content or audible music;’.

E-books VAT rates excemption 2020

E-books (ebooks) or electronic books are books that are transformed from the physical book to their digital forms. These are available in various formats such as text files pdf files or images and usually they are the electronic versions of the printed books. Nowadays ebooks can exist without an equivalent of their physical forms. Ebook readers are devices that help people read ebooks and are portable and lightweight made only for this sole purpose.

Benefits of e-books are that they can be tranfered digitaly or can be downloaded. At the same time the absense of paper makes ebooks cheaper and more affortable. By the early 2010’s Ebooks started to overpower regular printed books in terms of numbers and especially in very developed countries such as the USA. As a development at first E-books have been an item in which VAT rates are charged depending on the country of sale and currently they have become exempt from VAT by the British government .

Chancellor Sunak announced the 20% tax on ebooks will be abolished on the 1st of March. This relief should be passed on to e-book readers although it does not include audiobooks.

Some digital formats should be taxed differently as if the same tax is imposed it creates an ufair advantage. This is the case with e-books and that is why changes are taking place.

At the same time audiobooks have becoming more and more popular during the last years in comparison to ebooks and the tax will remain tha same for this category. So consumers of Audio books will  have to pay a 20% higher price in comparison to ebook readers.

This move to reduce VAT rates on ebooks was originaly planned for December but due to COVID and the corona virus pandemic it was decided to move forward with the ebook VAT exemption even faster. This will provide all people who are staying at home due to lockdowns to purchase books at cheaper rates.

e-newspapers are also included in the VAT rate cuts.

If you believe these developments impact your business and would like further advice, please contact us.

 

Source: Avalara VATlive, EU e-book VAT rate cuts

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