We’ve previously written about how Amazon’s e-book tax loophole means lower prices in Europe, and how that could be bad for UK competition.
Just to recap, Amazon’s decision to establish its European HQ in Luxembourg may prove to be fruitful for the e-commerce giant, as the country announced last year that it was slashing value-added tax (VAT) on e-books from 15% to 3%, meaning Amazon’s Kindle business could be set to flourish across Europe.
At present, tax isn’t applicable to physical-format books in the UK, but the country’s current VAT rate of 20% does apply to e-books. This means that Amazon will, if it chooses to, be able to seriously undercut local e-book sellers. The reason that the UK has this tax difference in place between physical and electronic books is to do with EU regulations that stipulate e-books can’t be exempt from the full VAT rate.
Luxembourg’s e-book VAT change goes against EU regulations, and is in line with similar moves that came into effect in France, with VAT on e-books lowering to 7%. French Ministers apparently told publishers that they’ll pick up the fines dished out by the EU.
Today, the heads of European publishing firms are meeting in Brussels for a round-table discussion, with the agenda firmly set on the need for digital books to be treated the same as physical books from a tax perspective. Whether that means scrapping all tax or, indeed, setting the tax at x% across the board is up for debate.
As Bookseller reports, UK reps from well-known publishing names such as Penguin and Hachette will participate alongside other European publishers for the discussion.
The round-table event is being hosted by the Federation of European Publishers (FEP) and the European Booksellers Federation (EBF), and the starting point for discussions seems to be that VAT should be decreased on electronic books if they’re to properly take off into the stratosphere. Feeding in to this debate is the issue of platform compatibility – all e-books should be readable on any e-reader, will be the stance taken.
“The standard tax rates on e-books are detrimental to growth and the different rates create strong disparities between multinational platforms and local ones,” the FEP/EBF statement said. “A key element for the growth of the e-book market is the interoperability between reading software and devices and the possibility for consumers to read any e-book bought on any platform on any device…
“The continuation of the rich and diversified European literature reflecting the richness of the multilingual European cultural identity is better served with a strong, diverse and healthy network of book and e-book retailers, able to provide European consumers with books in the format of their choice,” it continues. “One should therefore seek to avoid monopolies, or dominant positions especially in digital distribution.”
Whichever way you look at it, it is a little out of kilter to have one tax rule in place for physical books, and one for e-books. It really is about time European countries put all books on the same tax shelf.