Reduced VAT rate for e-Books back in the news
On 16 June 2017, the EU's ECOFIN was not able come to an agreement on reducing VAT rates on e-books in order to level the playing field with printed books. According to reports, the tax authority of the Czech Republic objected to the measure. Failure to come to a resolution follows several years of actions taken to grant e-Books a tax subsidy in order to stimulate reading in society.
Under current EU legislation, e-Books must be sold at the standard VAT rates of each member state. However, the equivalent printed version would be eligible for reduced VAT - creating an obvious mismatch in the pricing thereof. In the UK (who are still in the EU!), printed books and e-Books are subject to 0% and 20% VAT, respectively.
Two rulings at the European Court of Justice in 2014 and 2017 held that only legislative changes by the member states could allow the rates to be harmonised if the individual country decides to do so.
The Czech ECOFIN rep raised concerns on the e-book change, requesting a wider a review of the VAT treatment of digital services in general. It also raised concerns about the potential VAT fraud that could be created if such a change was implemented.
This further delay is perhaps more evidence that the EU's bureaucratic system may undermine its ability to adapt to the digital economy as necessary. The discussions on this topic will now be pushed back several months.