Originally Posted by Kali Yuga
Sure. But how many of them are retailers who are forcing UK publishers to pay 20% VAT, when they're only kicking back 3%?
The publishers aren't paying VAT.
I think you mean that they were setting prices and retailer/publisher split on the assumption that the customer would be paying 20% VAT.
(Which was probably true at the time the contracts were signed, it is only in the last year of so that Luxemburg introduced the lower 3% rate.)
Amazon got busted for exploiting a tax loophole, and pushing publishers to pay more VAT than they collect. The EU is now trying to close the loophole. So what's the "spin?"
"Amazon got busted" is the spin.
No they didn't. It is nothing to do with Amazon.
got busted for failing to comply with EU taxation agreements.
Amazon is one of the many companies (including Skype and Netflix according to the Guardian article) who took advantage of the lower rate.
And it is Luxemburg (and other countries) who will appeal the decision, not Amazon.
Edit: The actual statement of the commission:
Taxation: VAT on electronic books in France and LUXEMBOURG
The European Commission is asking France and Luxembourg to amend their VAT rates on electronic books (e-books).
Since 1 January 2012, France and Luxembourg have applied a reduced rate of VAT to e-books, which is incompatible with the current rules under the VAT Directive. Under the Directive, e-books constitute electronically supplied services, and application of a reduced rate to this type of services is excluded.
This situation is creating a serious distortion of competition to the disadvantage of operators in the 25 other Member States of the Union, as e-books can be easily purchased in a Member State other than that in which the consumer is resident, and current rules provide for application of the VAT rate in the Member State of the provider rather than that of the customer. The Commission has received complaints from a number of Ministers of Finance highlighting the negative effect on book sales in their domestic markets.
The Commission is aware of the different treatment being applied to e-books and printed books and notes the importance of e-books. Under the new VAT strategy, the Commission has opened this debate with the Member States and should put forward proposals before the end of 2013 (see IP/11/1508).
In the meantime the Commission, as guardian of the treaties, requires Member States to respect the VAT rules they themselves unanimously approved.
The Commission has therefore issued reasoned opinions to the two Member States. This is the second stage in the infringement procedure following the letters of formal notice sent in July 2012 (). The two Member States have one month in which to bring their legislation into compliance with EU law. Otherwise, the Commission may refer the matter to the European Court of Justice. (References: IN/2012/2098 and IN/2012/4080).
Edit: A similar proceeding not relating to eBooks:
Reference: IP/12/676 Event Date: 21/06/2012
VAT: Commission requests UK to amend its rules on reduced rates
The European Commission has asked the United Kingdom to amend its legislation which allows a reduced VAT rate for the supply and installation of "energy-saving materials". This measure goes beyond the scope allowed under the VAT Directive.
Under EU VAT rules, Member States can only apply reduced VAT rates to a limited number of goods and services, which are clearly listed in Annex III of the VAT Directive. This list does not include the supply and installation of "energy saving materials". Therefore, the UK's application of a reduced rate in this area contravenes EU legislation.
The request takes the form of a Reasoned Opinion (the second stage of an infringement procedure). If the legislation is not brought into compliance within two months, the Commission may refer the matter to the European Court of Justice.