The US may be blessed with lower taxes on the ebooks we buy (it’s the downside of fewer social services) but most of Europe isn’t so lucky. In Europe ebooks are taxes as a service with 17% to 25% VAT bundled into the retail price (and not the 5% to 12% most EU member countries apply to paper books) and a lot of people are not happy about that.
Bitkom released the results of a survey today which shows that there is strong support in Germany for lowering the taxes on ebooks. Almost nine out of ten Germans (87%) support charging a lower tax of 7% on ebooks sold in that country rather than the full 19% collected on most goods and services.
The results are based on a survey of 2,310 German consumers which showed that only 8% of respondents thought that ebooks should be taxed at a different rate than paper books, and 5% actually took the position that paer books should be taxed at a higher rate.
Bitkom calls on the German gov’t to respond by lowering the tax rate, noting that a recent EU court ruling (C219 / 13-K, dated 11 September 2014) gave the gov’t leeway to do so.
The topic of taxes on ebooks is becoming a pressing issue as the new year approaches. Thanks to a change in EU tax law, retailers will soon have to start collecting taxes based on where the customer is located in the EU, and not where the retailer is located. The change neatly wipes out what is known as the Amazon loophole, the sweetheart deal that Amazon (and a number of other retailers) secured by setting up their ebook operations in Luxembourg or other low tax environs.
The change in EU tax law is expected to increase the average price of ebooks in some parts of the EU, including the UK, but it’s not clear how Germany and other parts will be affected.
A number of countries have fixed price book laws, including Germany, so the price of ebooks published in those countries cannot go up without direct publisher action. eBooks published elsewhere, on the other hand, might see a price increase. The KDP contract suggests that Amazon may have that power, and their less public contracts with publishers outside of Germany might also grant them some wiggle room on price.
We’ll just have to wait and see.
images by pj_vanf