News

UK government holds firm on e-book VAT

The UK government has reiterated its view that it cannot bring down value added tax on e-books despite moves by the French and Luxembourg governments to cut tax rates on digital books so they are charged at the same level as those imposed on print books.

Last week, Tom Blenkinsop, the Labour MP for Middlesbrough South and East Cleveland, asked the government if it would consider bringing down the VAT rate on electronic publishing, and this week followed up with a further question asking whether it would follow France in unilaterally bringing the rate down, even though current EU law forbids it.

But David Gauke, exchequer secretary and Tory MP for South West Hertfordshire, in a written response reiterated the government's position that such a move would be unlawful. He said: "Under EU law, VAT on electronic books must be charged at the standard rate. A reduced rate cannot be applied to digital or electronic supplies, or supplies of text via the internet, as they are classed as supplies of services rather than physical goods. There is therefore no scope in the principal VAT directive to apply a reduced rate on e-books."

France has also been followed by Luxembourg, which brings its VAT rate on e-books down to 3% from January 2012. The Luxembourg move in particular hands a huge advantage to the dominant e-bookseller Amazon, which supplies e-books to UK customers from the Grand Duchy.

Amanda Tickel, a partner of KPMG, professional services firm, told the FT this week that the Treasury should rethink its decision, adding that Luxembourg believed it had a technical basis for its rate reduction. She said: "This is a key development. If the UK doesn‚t follow suit, it risks missing out on a massive future revenue stream in digital."

The EU has already indicated its willingness to rethink how VAT is imposed on electronic services and has indicated that it wishes to treat similar goods and services to the same VAT rate. It will also change how VAT is applied to electronic services so that VAT will be applied at the rate of the country where the service is received, in this case the UK, rather than where it was drawn from - but not until 2015. The French government has told publishers that it will pay fines imposed by the EU as a result of its decision.

Separately France has increased its lower rate of VAT on books from 5.5% to 7%, though this has been delayed by three months to allow the French book trade to adjust. It will now come in on 1st April.

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I am a candlestick maker and my life as a bookseller is ending ...

I am a candlestick maker and my life as a bookseller is ending ...

Nothing is designed to enrage people under pressure more than the words ....,"under EU law .."

There must be a better way for the government to deal with this. It's quite clear that ebooks aren't an 'electronic service'. They are closer to a physical book than a service, so there must be a lawyer who can argue this and get the correct terminology. Ebooks should be taxed (or not taxed) in the same way as physical books.

It seems like a loophole allowing governments to charge high rate VAT on this type of book, when really bookselling is in crisis and help is needed. The government is also supposed to be helping us move to more digital methods.

If anybody is giving a helping hand to Amazon, and others registering for tax outside the UK, then it's our own UK government.

there are good reasons for avoiding "A Tax on Knowledge" as they used to call it our government should remember them.

If only we could think of a way this would benefit Goldman Sachs, I'm sure HMRC could bend the rules.

Oops. As a small, very small author and publisher concern for the past 25 years we have only, lately, been selling a tiny amount of .pdf copies of our printed Guide books online - via a company in the U.S.A. It was only the 'Kindle business' which first alerted us to the fact that we should, perhaps, now charge 20% vat on every sale from our website :( It was certainly not mooted by the VAT Inspector who came for a 'look, see' around 4 years ago although he was aware of our two different methods of sale! Our printed versions have been bought and sold by Gardners Books for many years - and many thanks to them for their continued support and interest :)

Our saying was always 'one third to the Printers, one third to the books shops and one third to us'. Those days are long gone and obviously the printing trade must be finding it the hardest. We hardly make any profit now - in the same boat as the book shops and larger publishers. The books we are due to finish and publish this year are much too vast to even think of having printed as they contain hundreds of pages and much colour photography. Still 'Guide Books' but there you go - a tax on learning whatever anyone says!

So we've gradually bought all the software and learnt all the tricks of electronic publishing - but for what? It seems to us that the U.K. Government *says* it wants to help people run their own business but is doing nothing to assist! If anything it is ruining us all :(

I am a candlestick maker and my life as a bookseller is ending ...

Nothing is designed to enrage people under pressure more than the words ....,"under EU law .."

There must be a better way for the government to deal with this. It's quite clear that ebooks aren't an 'electronic service'. They are closer to a physical book than a service, so there must be a lawyer who can argue this and get the correct terminology. Ebooks should be taxed (or not taxed) in the same way as physical books.

It seems like a loophole allowing governments to charge high rate VAT on this type of book, when really bookselling is in crisis and help is needed. The government is also supposed to be helping us move to more digital methods.

If anybody is giving a helping hand to Amazon, and others registering for tax outside the UK, then it's our own UK government.

there are good reasons for avoiding "A Tax on Knowledge" as they used to call it our government should remember them.

If only we could think of a way this would benefit Goldman Sachs, I'm sure HMRC could bend the rules.

Oops. As a small, very small author and publisher concern for the past 25 years we have only, lately, been selling a tiny amount of .pdf copies of our printed Guide books online - via a company in the U.S.A. It was only the 'Kindle business' which first alerted us to the fact that we should, perhaps, now charge 20% vat on every sale from our website :( It was certainly not mooted by the VAT Inspector who came for a 'look, see' around 4 years ago although he was aware of our two different methods of sale! Our printed versions have been bought and sold by Gardners Books for many years - and many thanks to them for their continued support and interest :)

Our saying was always 'one third to the Printers, one third to the books shops and one third to us'. Those days are long gone and obviously the printing trade must be finding it the hardest. We hardly make any profit now - in the same boat as the book shops and larger publishers. The books we are due to finish and publish this year are much too vast to even think of having printed as they contain hundreds of pages and much colour photography. Still 'Guide Books' but there you go - a tax on learning whatever anyone says!

So we've gradually bought all the software and learnt all the tricks of electronic publishing - but for what? It seems to us that the U.K. Government *says* it wants to help people run their own business but is doing nothing to assist! If anything it is ruining us all :(