Risk & Economy » Tax » E-books to attract VAT after EU ruling

E-books to attract VAT after EU ruling

E-books are an 'electronic service', and as such cannot receive reduced rates of VAT like their hardcopy counterparts, top EU court rules

E-BOOKS will attract VAT at the standard rate after the European Court of Justice ruled they constitute an “electronic service”, rather than simply a book.

There had been a drive to see e-books receive the same zero-rated VAT treatment as their hardcopy counterparts, but the court found the regime could not be extended to take in digital products.

When a nation joins the EU, they can nominate a range of products and services for reduced VAT rates, and many countries failed to foresee the advent of digital media when they joined.

Amazon, the largest seller of e-books, said: “Like many of our customers, we believe that books in any format should be subject to the same reduced VAT rate.”

Head of VAT services at Baker Tilly Ian Carpenter said: “While the European Court’s judgment comes as little surprise, I doubt if this will be the end of the matter as the Digital Agenda for Europe has previously recognised the disparity of the application of VAT to printed books and e-books.

“One of the guiding principles of EU VAT law is that similar goods and services should be subject to the same VAT rate. The Commission itself recognises that where a VAT reduced rate, or even a zero or super-reduced rate, is allowed for printed books, it should also be applicable to e-books.”

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