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As part of a range of measures to help the struggling European newspaper and book industries, the European Union is looking at reducing the VAT rates on electronic print. This could provide a boost for news and book publishers on e-tablets, the Internet and CD Books.

EU to Eliminate VAT Penalty on Electronic Publishers

In almost every EU member state, printed books and newspapers incur a reduced VAT rate. However, most countries impose the standard higher rate on electronic material.  See below for some examples of standard VAT rates and reduced rates on printed materials.  For example, in the UK printed material is taxed at 0%, but electronic material is at 20%.

The European Commission last month indicated that it is reviewing this, and may move to allow reduced VAT rates on electronic services. The EU Director General for Education and Culture, Jan Truszczynski, commented “We believe content should be taxed the same way, whether printed or in tablet”.

Richard Asquith, Head of VAT at the TMF Group commented:

“The EU Commission is concerned with the sharp decline in the print industry, and is anxious to help subsidise the sector. The problem with direct subsidies is the political ramifications of being seen to underwrite many news publishers. Ironing out this tax anomaly would be a simple way to help the industry without directly interfering.  When this measure goes through, the publishers would be able to maintain their electronic cover prices and hold on to the VAT cut for themselves."