EU citizens could pay less for e-books after plans to allow member states to reduce VAT on e-publications were backed in committee on Wednesday.
An EU Commission proposal to enable member states to charge a reduced rate of VAT on e-books, which would bring them into line with VAT levied on printed matter, was backed by the 48 votes to 1 with 2 abstentions in the Economic and Monetary Affairs Committee.
“Our way of reading has changed rapidly over recent years. Now, it makes no sense to apply a double standard whereby an online newspaper is taxed higher than a printed one you buy in a shop. This new directive will give Member States the option to align VAT on digital content with printed matter,” said the rapporteur Tom Vandenkendelaere (EPP, BE).
The fact that print and digital publications are currently subject to separate value added tax (VAT) rates essentially means that products that are considered to be comparable and substitutable are being treated differently to one another. This situation results from rules which, on the one hand, allow Member States to apply reduced rates to printed publications, but on the other exclude this possibility for digital publications. In addition, the recent evolution in the VAT framework means that VAT on digital services should be levied in the Member State where the consumer is based (thus protecting the single market from application of different rates within a Member State because of the different location of providers). The question of broadening the possibility to apply reduced rates to all publications, be they print or digital, is addressed in the proposal presented as part of the VAT digital single market package, and adopted by the European Commission on 1 December 2016.
Currently, e-books have to be taxed at an EU minimum standard rate of 15%, whereas member states are free to charge the reduced rate of at least 5% — and in some cases, even zero-rates — on printed publications.
Music and videos, as well as publications predominantly consisting of music and video content, would continue to be taxed at the standard VAT rate.
The proposal will now be voted by Parliament as a whole on May 31st or June 1st.