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EU Proposes Reduced VAT Rates For E-books

by Ulrika Lomas,, Brussels

27 July 2016

The European Commission has launched a consultation on changing the value-added tax rules that apply to electronically supplied publications such as e-books to enable them to benefit from the same, reduced VAT rates as for printed publications.

Currently member states may tax printed books, newspapers, and publications at a reduced rate of no less than five percent. In addition, some member states are permitted to levy VAT rates lower than five percent or are permitted to zero rate supplies of certain printed publications. However, digital publications that are electronically supplied must currently be taxed at the standard VAT rate.

While unfair tax competition concerning electronically supplied services was negated from January 1, 2015, when place of supply rules were changed to tax such supplies in the location of the consumer (thereby removing any advantage for companies to set up in low tax member states), this latest change concerning tax rates will ensure parity between different forms of publications. The change is consistent with the Commission's pledge to make value-added tax rates technology neutral as part of its Digital Single Market initiative.

In launching its consultation, the Commission acknowledged that despite "the differences between printed and electronically supplied publications with regard to the format, they offer the same reading content for consumers and the VAT system needs to keep pace with the challenges of today's digital economy."

The consultation seeks views on the Commission's proposal to allow member states to apply reduced or super-reduced rates of value-added tax on electronically supplied services. It also discusses the definition and scope of electronically supplied publications and seeks input on the potential impacts of extending reduced rates to such publications.

TAGS: compliance | VAT rates | tax | European Commission | value added tax (VAT) | VAT legislation | law | legislation | tax rates | European Union (EU) | services | VAT case law | VAT compliance matters | Europe

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