Reduced VAT for ebooks: good news and a call for action
Last year closed with a piece of excellent news on one of the main fronts of FEP’s lobbying activity: the long-awaited adoption of the Directive that allows the EU Member States to apply to digital publications the same reduced, super-reduced or zero rates of VAT that they apply to publications on physical supports. The Federation of European Publishers and its members hailed this achievement, on which they invested a lot of energy, as a great success, and the recognition that the value of books and journals stems from their content, not from the way they are accessed.
But let’s take a step back to see how we got there. The proposal had finally been put forward by the European Commission in December 2016, after a decade of intense lobbying on behalf of FEP and its allies. It faced a bumpy road in the Council of the EU, where it was withheld for reasons independent from its own merit, until at last a political agreement was reached on 2 October 2018. Formal adoption followed on 6 November, and the Directive entered into force on 4 December.
So, what does this mean, exactly? The new Directive allows the EU Member States, if so they wish, to apply reduced rates of VAT to e-publications; only Member States that already apply super-reduced or zero rates will be allowed to extend those to digital books and journals. More specifically, Council Directive (EU) 2018/1713 of 6 November 2018 amending Directive 2006/112/EC as regards rates of value added tax applied to books, newspapers and periodicals adds e-publications to the list of goods and services that are allowed a reduced VAT under EU legislation; from now on, reduced VAT can apply to the ‘supply, including on loan by libraries, of books, newspapers and periodicals either on physical means of support or supplied electronically or both (including brochures, leaflets and similar printed matter, children’s picture, drawing or colouring books, music printed or in manuscript form, maps and hydrographic or similar charts), other than publications wholly or predominantly devoted to advertising and other than publications wholly or predominantly consisting of audible music or video content’.
The unjustified fiscal discrimination between books in different formats has thus come to an end in EU law; now it’s time to put the new provisions into practice. And here as well we have good news: only a couple of months after the entry into force of the Directive, implementation is picking up speed, and we have now already 5 countries where this is reality since the beginning of the year (non-EU member Iceland, plus Croatia, Malta, Ireland and Portugal), in addition to France and Italy, which had it since 2012 and 2015, respectively. Moreover, the provision has been recently included in the draft budget law in Spain, and is going to be adopted later this year in Poland, Sweden, Finland, Norway and possibly Austria; chances are good for a few more Member States. We hope this is a good example to all the other Member States, and also a reminder that in this field, good things happen, too.