Amazon's EU VAT rate on ebooks drops to 3% from 15%

[pdurrant]

The price that Amazon charges in all its EU stores (including the UK store) has dropped today to 3% from 15%.

The net effect of this change is that the price of most eBooks in the Amazon Kindle store has dropped (for EU customers) by just over 10%

This change is because Luxembourg has dropped the VAT rate it charges on eBooks down to 3%, the same rate it uses for printed books.

[HarryT]

Not quite all: I've looked at a few of the agency books I've bought in the last few weeks, and some of those have stayed unchanged. ie, the publisher has, in effect, increased the price to leave the VAT-inclusive price unchanged.

Most, however, do seem to have fallen, agency included.

[pdurrant]

It also has happened in non-Agency books, where the RRP has dropped, but so has the discount that Amazon's giving on the book, leaving the actual price the same.

[HarryT]

Understandable in those cases where Amazon are basing the ebook price on the paperback price. Eg, "Dune" is still £4.99, with the paperback at £5.00,

[JoeD]

Wonder if anyone can dig up some publishers posts saying don't forget ebooks have vat on them too which is why prices are not lower. Raising their prices to offset the vat drop is just greed, they certainly didn't reduce prices when vat went up.

[HarryT]

When did VAT go up, Joe?

[murraypaul]

Originally Posted by HarryT

When did VAT go up, Joe?

From 17.5% to 20%.

[Ajax]

Originally Posted by HarryT

Understandable in those cases where Amazon are basing the ebook price on the paperback price. Eg, "Dune" is still £4.99, with the paperback at £5.00,

That is still the book that makes me more angry than any other since the Agency pricing went into effect in the US. I had it in my wishlist and was about to buy it... then agency pricing hit.

It went from $5.99 to $14.99 and hasn't dropped yet.

[HarryT]

Originally Posted by murraypaul

From 17.5% to 20%.

But that didn't affect Amazon's ebook prices, because they're using the Luxembourg VAT rate, not the UK one.

[Mike L]

Just looking at the six ebooks I bought from Amazon UK in the last few weeks:

- 4 have gone down in price (by about 10 percent)

- 1 has gone up

- 1 is the same price.

Not necessarily a representative sample, of course.

Mike

[JoeD]

Originally Posted by HarryT

But that didn't affect Amazon's ebook prices, because they're using the Luxembourg VAT rate, not the UK one.

That's a good point

Regarding the VAT drop, same thing happened when the UK did a temporary drop to 15%, many companies just raised their prices to make a few more % profit during that time, only a few actually passed the savings onto the customer.

[Terisa de morgan]

Originally Posted by JoeD

Regarding the VAT drop, same thing happened when the UK did a temporary drop to 15%, many companies just raised there prices to make a few more % profit during that time, only a few actually passed the savings onto the customer.

It happened the same in Spain, that's my reason not to believe the publishers and their claims about VAT.

[pdurrant]

Originally Posted by pdurrant

The price that Amazon charges in all its EU stores (including the UK store) has dropped today to 3% from 15%.

The net effect of this change is that the price of most eBooks in the Amazon Kindle store has dropped (for EU customers) by just over 10%

This change is because Luxembourg has dropped the VAT rate it charges on eBooks down to 3%, the same rate it uses for printed books.

I was surprised when this happened, because I was pretty sure that the ability to set VAT to the reduced rate only applied to print books, not ebooks.

It seems that after six months, the EU Commission has finally noticed this too.

The European Commission has launched an infringement procedure against France and Luxembourg because the VAT rates they are applying to digital books are potentially incompatible with EU law.

EU legislation allows Member States to apply reduced VAT rates to a limited list of goods and services set out in Annex III to the VAT Directive. Downloading of digital books is regarded as a service supplied electronically, which is not included in this list and cannot therefore be taxed at the reduced rate.

However, there is unlikely to be any immediate change. There's a long, slow process for bringing countries to task for breaking the rules.

[HarryT]

My only surprise at this is that it took them so long. It seemed like a pretty obvious violation of the EU's e-commerce VAT directive.

[MikeB1972]

I still don't get how the point of sale is the place you live for geo-restrictions and Luxembourg for VAT.