EU finance ministers are set to take the bloc’s tax rules further into the digital age by allowing reduced value added tax on ebooks and other digital publications.
The change will allow member states to bring VAT on such publications in line with the super-low rates charged on printed books, newspapers and magazines. France has pushed the initiative to apply the print-material rate to the electronic equivalents.
The bloc’s VAT rules were written before the advent of ebooks and require that member states can only lower rates on specifically named items — each country’s exemption request must be unanimously approved by all the member states.
EU officials had grown tired of hearing domestic political squabbles over reduced rates and in January the European Commission proposed allowing each country to apply reduced rates to most goods and services, as long as they maintained a weighted average VAT rate of at least 12 per cent.
The new, flexible VAT proposal is being considered by EU member states and the European Parliament.
Several countries, including France and Luxembourg, have lost court decisions over the issue and the European Court of Justice decided in 2017 that the current rules require standard VAT rates be applied to digital publications.
However, France and Italy continue to apply low rates to ebooks, and the commission delayed enforcing the court’s ruling while member states were still deciding on the ebooks proposal.
The change would “certainly be good news for booksellers”, said Fran Dubruille, director of the European Booksellers’ Federation. “A book is a book is a book and a similar VAT rate should apply to electronic books as does to a paper book.”
In recent months talks about the specific ebook exemption were deadlocked, with the Czech Republic blocking the initiative because France and Slovenia would not support a separate proposal that Prague wanted as part of its effort to combat VAT fraud.
The Czech proposal is the final piece of a series of reforms put forward in 2014 by Andrej Babis — then Czech finance minister, and now prime minister — to crack down on tax fraud.
Paris and Prague have agreed to support each other’s proposals, according to three EU diplomats. While Romania has requested a late change that could scupper the long-sought deal, officials hope both changes will still go through at a meeting on Tuesday.
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