Parity for VAT on E and Printed Books

One of the many oddities of VAT is that the supply of hard copy printed books and magazines is zero rated for VAT whereas e books are standard rate for VAT. This means that the average Kindle or Kobo owner can buy a hard copy version of a book or magazine VAT free but will be charged standard rated VAT if they buy the same publication as an e publication from an online store.  

The EU is going to vote on proposals to enable each member state to charge a reduced rate of VAT on e-books to bring them into line with VAT levied on printed matter. The proposal was backed by 48 votes to 1 with 2 abstentions in the Economic and Monetary Affairs Committee.

This move would allow UK suppliers to treat the sale of e books as zero rate for VAT. Suppliers in other EC member states where printed books attract a reduced rate of VAT of 5% or more would be able to treat e publications as subject to this same reduced rate.

Although this sounds as though it will make life “better” for e book and magazine retailers it will still create a potential oddity and an EC VAT exposure.

A UK supplier of a best selling e book could find themselves having to register and account for VAT at a positive but reduced rate on the supply of e books in another EC country if the sales exceed the distance sales thresholds in that member state, whereas the sale of the same e book to a uk customer will be UK VAT free!

If you or your client is making sales of goods or services to customers in  other EC countries or to outside the EC, or trading via an online store or platform, it is always worth contacting our free VAT helpline to check that VAT is correctly being accounted for

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