UK e-book prices to rise from 1st January 2015

[thewitt]

Here's the actual email. I still need to read about the implementation details.
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On January 1, 2015, value-added tax (VAT) rates for electronic books will change in most EU territories. VAT will be based on the customer’s country of residence instead of being the same across all EU territories.

Note that prices for books on iBooks include VAT, while the publisher’s proceeds are calculated after VAT is deducted. As a result, your proceeds for some book sales in the EU may change.

[thewitt]

Originally Posted by DuckieTigger

Are you also going to get a statement on how many book sales went to each country in the EU and each different sales price?

Yes...

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Your reporting will not change. However, the publisher proceeds listed in the monthly sales report will reflect the new VAT rates for the customers in their country of residence. Along with the publisher proceeds, reporting will also include the price paid by a customer for any eBook and the country in which the book was sold, allowing you to confirm the applicable VAT rate on any book sale.

[HarryT]

Originally Posted by thewitt

Here's the actual email. I still need to read about the implementation details.
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On January 1, 2015, value-added tax (VAT) rates for electronic books will change in most EU territories. VAT will be based on the customer’s country of residence instead of being the same across all EU territories.

Note that prices for books on iBooks include VAT, while the publisher’s proceeds are calculated after VAT is deducted. As a result, your proceeds for some book sales in the EU may change.

So it doesn't say, as you said earlier, that income will fall; it says that it will change. It may fall or it may rise, depending which country the buyer is in.

[DuckieTigger]

Originally Posted by HarryT

So it doesn't say, as you said earlier, that income will fall; it says that it will change. It may fall or it may rise, depending which country the buyer is in.

Isn't it save to assume that previously the itunes store was based in Luxembourg, just like Amazon. And that any book sold elsewhere will now have lesser money going to the publisher? It is interesting that the publishers proceeds are calculated after VAT is deducted. Absent is how Apple's cut is calculated - before or after VAT is deducted. Prices will be the same, Apples cut will be the same - only now the publisher will automatically pay for the extra VAT. Sounds fishy.

[thewitt]

Originally Posted by HarryT

So it doesn't say, as you said earlier, that income will fall; it says that it will change. It may fall or it may rise, depending which country the buyer is in.

No, revenue will go down for sales in all countries except Luxembourg, where I suspect sales for most authors are next to zero. Today all iTunes EU sales VAT calculations are based on the 3% VAT from that country. All that changes in January 2015.

The typical VAT tax is around 20%, though France is an exception at 5.5% and Hungary on the other end at 27%.

Revenues will go down for virtually all books sold to EU members though iTunes, and it will be interesting to see if it has a global impact on pricing or not.

[thewitt]

Apple's commission and Publisher's proceeds are calculated after VAT has been deducted from the selling price on iBooks.

According to the FAQ on their website.

[Shades]

Originally Posted by HarryT

It has provided a level playing-field. You've been going on for years about how unfair it is that Amazon are treated differently to small businesses, and now you seem to be complaining how unfair it is that Amazon are being treated the same as small business . You're a difficult man to please.

They did level the playing field. Only they made it as a lot more difficult for small businesses. This doesn't really affect Amazon because they have teams of lawyers and staff to jump through the legal hoops. Small businesses will have to find ways to jump through those hoops on their own and hope they got things right. Face it, it's much easier to sue a small business than it would be to attack Amazon.

The only ones to benefit from this are the people in the government. Amazon won't change much, small businesses will get railroaded with paperwork and no doubt fines and the consumer may pay less or (more likely) pay more.

I also don't see why businesses won't adjust prices to make up for those after VAT fees. That way their profits stay the same and the consumer pays that much more...

[rkomar]

I'm a bit confused as to why the VAT will have to come out of anyone's share of production. Are they including it in the list price? Over here, the equivalent sales tax is tacked on to the purchase price, and is understood to be going directly to the government. Were Amazon offering the ebooks at higher list prices but overall lower prices with VAT included?

[thewitt]

Yes VAT is included in the list price for Amazon and Apple - though Amazon has a program that let's you set the price before VAT, most people used the Included option when pricing their eBooks since the VAT used was 3% and really not worth the extra effort.

Now that it's at least 20% for most countries, this has a significant impact on revenue.

[fjtorres]

Originally Posted by DuckieTigger

Why are you singling out german economies now? Is Germany special somehow?

Their economy hasn't been squeezed by the euro crisis like Spain, Italy, France, and others. So they're not as actively trying to squeeze blood from turnips.

[DuckieTigger]

Originally Posted by fjtorres

Their economy hasn't been squeezed by the euro crisis like Spain, Italy, France, and others. So they're not as actively trying to squeeze blood from turnips.

Ah, thank you. I was under the wrong impression that you tried to imply that Germans are not interested in making money. I just talked to my parents in Germany yesterday and it is still getting better with the economy. Delayed from the USA, of course, but for that I blame Germany's strong export power. Problem with making a ton of money exporting is that it creates dependence on outside out of control markets.

[Rizla]

Originally Posted by HarryT

Not suggesting for an instant that you haven't been polite, Rizla. But I do find a certain irony in the fact that your often-expressed wish that Amazon should be treated the same as small companies having now been granted, you're now saying that small companies should be treated differently to Amazon. First you want a level playing-field and then, having got one, you no longer want it!

As I previously stated, my argument is that small retailers making little money should not be subject to the same labyrinthine VAT scheme as major corporations. It effectively penalizes small companies who may not have the resources to deal with the new complicated law.

Previously Amazon actually paid less tax than small retailers. It is disgusting that this practice was allowed to continue for so long.

I repeat, I don't think Amazon and other large corporations should play on a "level playing-field" with small companies. It's not a level-playing field. Large companies are powerful and can leverage government to alter laws to suit them. When a company gets very large, they should be subjected to a progressive "taxation" (in whatever form it takes). Smaller companies should effectively be "taxed" less in order to encourage small-scale entrepreneurship.

[Rizla]

Originally Posted by pdurrant

I wanted Amazon to have a level playing field with other big companies like WH Smiths. It's ridiculous that there's no minimum turnover before requiring registering for the MOSS scheme

I agree.

[Rizla]

Originally Posted by fjtorres

What (some) people really wanted was a law that *only* applied to Amazon.

Level playing field or fairness isn't really the objective.

I think that's true (the second line). Many people are wondering what the EU's objectives are.

[fjtorres]

Originally Posted by Rizla

Many people are wondering what the EU's objectives are.

Not sure why anybody would wonder.
Politicians and bureaucrats want what they always want: money they can control to buy votes and/or line their pockets. Everything else flows from there and if they nuke entire cottage industries, so be it.

The needs of the few (them) outweigh the needs of the many (everybody else).

The roots of this come from outside the ebook world so going into detail belongs elsewhere. (Geopolitics, for one. Sociopolitics, another.)