Booksellers in the European Union will be able to sell electronic editions with lower value added tax (VAT) in order to catch up with concessions that already apply to the paper books. The changes in EU legislation will enter into force at the beginning of the month. Most EU countries, except Bulgaria and Denmark, allow paper books to be sold at a reduced VAT. The average level of tax to the European Union is 7.6%, while for electronic books it is 19.9%, according to a study done for the European Parliament.
The new proposal would allow, but not compel, the EU Member States to apply lower tax rates on the sale of e-books, which currently account for only 5% of European book market. Commission predicts that this share will grow to 20% by 2021.
The step to change VAT on e-books comes after intense discussions within the European Commission, Member States and the European Court on whether e-books must be sold under the same conditions as paper.
The court ruled in March that the reduced level of VAT on e-books in France and Luxembourg is illegal. The European Commissioner for Digital Single Market Andrus Ansip told that the court’s decision was interpreted as a sign that it is time the European Commission to intervene. Ansip said that measures on VAT on e-books are the last piece of the puzzle, after a series of legislative initiatives this year aimed at stimulating e-commerce, including changes in conditions affecting electronic payment and access to e-commerce sites within the European Union.
The sales of e-books are beginning to fall in some European countries. The British Publishers Association reported lower levels of sales of electronic books in 2015 compared to the previous year. Booksellers argue that their optimism regarding the implementation of e-books declined, but hope the reduction of VAT this trend to reverse.
The VAT is probably one of the factors that could explain why the market for electronic books is growing so slowly so far. Booksellers promote electronic editions by targeting small groups of readers who prefer them special, though sales decline.
The new rules of the EC on VAT that mention online publications will reflect and subscriptions to digital editions.
“Weather you read something on paper or in electronic form, the book is a book and newspaper remains newspaper”, said European Commissioner for Economic and Financial Affairs, Pierre Moscovici. “high common VAT on digital products “no longer complies with the economy the way it is now< added he.
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