View Full Version : VAT paid on eBooks in the EU, what do you pay?


raulf
04-13-2010, 08:13 AM
I read today in the spanish language newspaper El País (http://www.elpais.com/articulo/cultura/libro/electronico/pagara/todo/IVA/elpepicul/20100413elpepicul_1/Tes), that the VAT one must pay for e-books in Spain will (finally) be the highest one (16%, 18% from June 1st on). For those not fluent in Spanish, i'll summarize the story:

1) VAT for e-books has been 16%.
2) Publishers and budding e-retailers complain: hey Mr. government, if VAT for p-books is 4%, wtf is it 16% for e-books? makes no sense to me.
3) Culture minister says in December that VAT for e-books will be 4%. hooray. fireworks. dancing in the streets.
4) Publishers get final response from tax (not culture) powers that be saying that books sold on on CD or USB sticks or other physical/digital format will pay 4% (you know, like Encarta, ups, no, wait, that is no longer published anymore) BUT that e-books sold over the Internet pay top 16% VAT. Always count on the taxman for bad news.

Why? because this type of transactions are considered e-commerce, and according to some EU directive (article 98.2 of something from 2006) on electronic services, you can't charge the lowest VAT for such things. you know, electronic, baaad.

(mumble, mumble) but if i buy that same ePub file in, say, a SD card, i pay 4%? crazy.

So i'd like to check, if that's so in the rest of the EU. i've never bought an e-book from an EU-based e-retailer, only from amazon.com, so i don't know what VAT they charge. Anyone who has bought e-books in Europe can confirm or deny that European ban on low taxes on e-books?

By the way. When i buy a paper book from amazon.co.uk i am charged 4% VAT. i guess that, buying a "real" book over the Internet is not e-commerce:chinscratch: :blink: only when you buy bits from a server into your computer/device (and they Holy Spirit is involved?). The latter is a (fully?) electronic service and should be taxed higher (because?) than something that does the same thing in a slightly different way (involves more human beings doing things with their hands like loading cardboard packages into a van?) are they better than the people that design, build, maintain and repair servers? design software? type copy for e-stores? is there any sensible reason for all this? is there any God? will you marry me? what's for dinner?
:thinking2
:wall::mad:

Terisa de morgan
04-13-2010, 08:26 AM
i guess that, buying a "real" book over the Internet is not e-commerce:chinscratch: :blink: only when you buy bits from a server into your computer/device (and they Holy Spirit is involved?).

Yes, that's right, and that's the reason for you be able to buy a paperbook at Amazon.com but not the electronic version, that's geographically restricted :rolleyes:

TGS
04-13-2010, 10:12 AM
Same in the UK. Books are zero rated for VAT, but ebooks are standard rate -17.5%.

HarryT
04-13-2010, 10:14 AM
The EU's eCommerce VAT directive requires that all "downloaded data" be charged at the standard (ie highest) rate of VAT in each country. It was originally intended to apply to music downloads - eBooks just got caught up in it.

Jellby
04-13-2010, 10:54 AM
If I were a retailer I would offer:

1) Buy a CD with your books in it. You get low VAT and no geographic restrictions.

2) Shipping is optional, I can keep the CD for you.

3) There would be a free service where you can download the contents of the CDs you own. This would be subject to VAT, but x% of free is still free :D

pdurrant
04-13-2010, 11:01 AM
If I were a retailer I would offer:

1) Buy a CD with your books in it. You get low VAT and no geographic restrictions.

2) Shipping is optional, I can keep the CD for you.

3) There would be a free service where you can download the contents of the CDs you own. This would be subject to VAT, but x% of free is still free :D

What an interesting wheeze. I suspect that HMRC would take a dim view of it.

mr ploppy
04-13-2010, 12:03 PM
What an interesting wheeze. I suspect that HMRC would take a dim view of it.

I somehow don't think they would want the media asking why they were taxing books so close to an election.

Ea
04-14-2010, 01:33 PM
There's no special low tax rate on books in Denmark, so it would be the same rate as on everything else.

Mike L
04-14-2010, 02:46 PM
3) There would be a free service where you can download the contents of the CDs you own. This would be subject to VAT, but x% of free is still free

Sorry, but that won't work. If you sell a product, and one element of what you are selling is free, VAT is payable on the value of the free element. Note: value, not price.

In other words, they're one step ahead of you.

Jellby
04-14-2010, 03:21 PM
Sorry, but that won't work. If you sell a product, and one element of what you are selling is free, VAT is payable on the value of the free element. Note: value, not price.

In other words, they're one step ahead of you.

But they are different products. I sell CDs and offer a separate free service.

pdurrant
04-14-2010, 03:25 PM
But they are different products. I sell CDs and offer a separate free service.

But the free separate service is one that is only available to the people who buy the CDs. I can't see how you can avoid the conclusion that the free service is sold as a package with the CD. Mike L is right - this wheeze has come up before, back when books first started to have CDs bound into them. The CD had to have standard rate VAT and the book zero rate, and even though the CD was 'free' with the book, HMRC (or HMC&E as they were then) insisted that VAT would have to be charged on the value of the 'free' CD.

This was, of course, this was before books on CD were allowed to be zero rated.

No - a good idea, but Mike L's right, HMRC are there before you - I'd just forgotten.

Jellby
04-14-2010, 03:56 PM
But the free separate service is one that is only available to the people who buy the CDs.

No, I would offer the service for any CD you send me :D

pdurrant
04-14-2010, 04:25 PM
No, I would offer the service for any CD you send me :D

Hmm... so you offer a data hosting service, allowing people to send you data on CDs that they can then download only from their login at your web site. And you also sell ebooks on CD, which you offer to host as well.

That might just squeak by... but IANAL.

stasys
04-15-2010, 05:24 AM
We in Lithuania have 21% VAT on paper and e-books. Try to bit that!

GeoffC
04-15-2010, 05:27 AM
:eek:

Zzyzx
04-15-2010, 06:22 AM
We in Lithuania have 21% VAT on paper and e-books. Try to bit that!

Norway may be looking at 25% but the discussions are ongoing.

The sentralized distribution system for e-books is ready but the retailers are waiting for a governmental decision on VAT for electronic books. So I cannot get any e-books in my own language just yet.

Keep in mind, we are not a member of the EU but we still have to abide by a lot of the EU crap.

Ea
04-15-2010, 08:55 AM
We in Lithuania have 21% VAT on paper and e-books. Try to bit that!
It's 25% in Denmark (it's the standard VAT rate).

Cash666
03-05-2011, 08:26 PM
Or you could sell intellectual property rights for the material and then give free access to a download/torrent of said material. Or make the book a reward for donation of a certain amount? there are many ways around it. In fact you could just link to a web page which i am pretty sure doesn't count and let them copy it themselves.

tompe
03-06-2011, 08:08 AM
It's 25% in Denmark (it's the standard VAT rate).

25% in Sweden for eBooks but for paper books it is 6%.

Mike L
03-06-2011, 08:13 AM
Or you could sell intellectual property rights for the material and then give free access to a download/torrent of said material. Or make the book a reward for donation of a certain amount? there are many ways around it. In fact you could just link to a web page which i am pretty sure doesn't count and let them copy it themselves.

Forget it. As I explained in my previous post (#9), those tricks won't let you avoid VAT. It doesn't matter how you dress it up, it's still a VAT-able transaction.

HarryT
03-06-2011, 08:33 AM
Or you could sell intellectual property rights for the material and then give free access to a download/torrent of said material. Or make the book a reward for donation of a certain amount? there are many ways around it. In fact you could just link to a web page which i am pretty sure doesn't count and let them copy it themselves.

Good luck with your plan, but the tax authorities are not stupid.