Kobo is doubling down on Europe
Late last year Kobo hired their first Manager for the European market. Pieter Swinkels is the head of Pub. & Ind. Relations, and he’s responsible for driving forward Kobo’s ambitious expansion into the European market.
A few days ago ereaders.nl caught up with him and they asked him a few questions. It turns out Kobo have a goal of dominating the ebook market in Europe. It’s not just a dream; it’s their goal and they know how they’ll do it.
Kobo is going to set up teams to work with publishers all over Europe. They don’t just want to sell ebooks; they want to sell everyone’s ebooks. In fact, those teams are going to be organized by country and language. The sheer expense of it all should give you an idea of how serious Kobo are about this.
As a first step, Kobo plans to have local content from Germany, Spain, France, Italy and the Netherlands by April of this year.
Unfortunately, they’re not quite doing it the best way. One blogger I follow is furious because Kobo started collecting the local taxes for Romania, which is 24%. They don’t actually have to collect that much because they don’t physically operate in Romania. They only need to collect the taxes for whichever country they’re in, and pay it to that country. For example, Amazon.de only collect the 8% that Germany charges, and this is perfectly fine under EU tax laws.
Update: Minor goof here. Ebooks in Germany still get the full standard VAT at 19%, not 8%.
I knew Kobo would be one to watch back when I first noticed the job posting last year. They’re ambitious, and they’re the only ones who have the vision I want to see. With luck, this time next year we’ll be talking about which of the leading ereader makers will have tied their devices to the Kobo ebookstore.
Ian March 15, 2011 um 10:25 am
well I believe Sony in Australia have linked their readers to the Kobo ebookstore, so it would be a obvious move for them in Europe as well. What the big question is ..who will buy REDgroup and Borders share in Kobo. Good chance for a company to move into the international market. (B&N or Sony)
Nate the great March 15, 2011 um 10:59 am
But Sony have their own ebookstore in the US, and in Europe I don’t know who they are using.
fjtorres March 15, 2011 um 12:43 pm
In europe they’re relying on the gang of ten thousand; all the regional generic ADEPT shops.
In other words, it is up to the user.
It is a lot easier than trying to build a coherent Global Strategy.
Piet van Oostrum March 15, 2011 um 11:34 am
I also wonder how they are going to deal with geographical restrictions.
Nate the great March 15, 2011 um 11:47 am
I’m hoping they’ll push to abandon them.
Ian March 15, 2011 um 11:50 am
I imagine they are planing on dealing with publishers in each country ,,, what a headache that would be.. With Europe suppose to have open trade between it’s members ..book publishing seems to have been over looked.
Ian March 15, 2011 um 11:54 am
I was just thinking… the bit that shocked me in that story was the 24% sales tax on the ebooks. If I had to pay sales tax on ebooks here (Australia) I would not buy any ebooks from sellers based here, I would use an IP masking service and buy all my books from the US
Olympia Press March 15, 2011 um 12:05 pm
Kobo’s been growing at around 50% a month (from a very small base) for me since last Nov. And it obviously hasn’t been Borders. They have had some personnel changes–nothing major, just which you’d expect as they move from startup to something a little different. Could be why the taxation question is out there.
/Now watch, I’ll finally access gmail, and find out they’ve dropped me 🙂
elmar March 15, 2011 um 12:24 pm
funny how a so called basic no frills reader can have such a future.
Nate the great March 15, 2011 um 12:33 pm
Thwack! (I deserved that.)
Andrew Rhomberg March 15, 2011 um 3:30 pm
The VAT rate of 8% only applies to physical books in Germany. ebooks attract the "standard" German VAT rate, which in Germany is 19%.
ebooks across are always taxed at "standard" VAT rates in the EU. This is an EU directive (I.e. meber states have to oblige).
What VAT rate applies depends on where your servers are lcoated. If they are exclusively in the UK, you can charge UK VAT rates (20% for ebooks) even if the purchases is lcoated in another EU country. (Physial books are charged at 0% VAT in the UK).
The lowest VAT rates in the EU are in Luxembourg and the Azores (15%). This is why the Skype servers are located [exclusively] there. However, the rules can be complex and it is quite possible that local rates have to applied under certain circulstances.
A Canadian c(or any other foreign company) cannot sell into Europe VAT free, by keeping its servers in Canada, that would violate the above mentioned EU directives.
There is one country ion the EU that charge sthe same rate (25%) for physicla books and ebooks. In almost all othjer EU countries physical books are taxed at lower VAT rates than ebooks.
BY the way, the purchase price MUST always be shown with VAT inclusive (the receipt will however show the amount of tax included and the price without tax).
Nate the great March 15, 2011 um 3:55 pm
You’re right; I was less than clear on this.
Jack W Perry March 15, 2011 um 9:47 pm
I thought Amazon Kindle and Apple iBooks had strong presence in Europe? Plus they both have deep pockets.
Nate the great March 15, 2011 um 10:19 pm
iBooks doesn’t have a strong presence anywhere, and the Kindle is hampered by the fact it doesn’t have much non-English content.
Mikaela March 16, 2011 um 9:39 am
I got a surprise last week, when I discovered that Kobo suddenly had started to charge tax. I asked why on Twitter and got the response it was " A Legal imperative." I don’t blame them, I am just a bit surprised that they didn’t do it before. Will I stop buying books from them? No.
Pieter Swinkels May 20, 2011 um 10:57 am
So nice to see the Kobo ereading service getting so much positive attention. To clarify this situation: since Kobo is a Canadian company with its servers outside the EU, it must charge local VAT rates on EU customers (and remit it to the relevant tax authorities). We’re extremely sorry for our Romanian user, but there is not a lot we can do about the local VAT rate in his country. Well, there is actually: we’re in the process of getting a EU domicile so that we can charge the local EU rate. In the meantime we will work hard to continue delivering the best ereading experience in the world. Pieter Swinkels, Director Publisher & Industry Relations EU
Doru June 5, 2011 um 12:32 am
Kobo is not charging tax it is only collect it.
Sorry for Romanian felow that doesn’t want to pay taxes charged by its own gov.
As Canadian comapany, Kobo is only following the rules established by the gov. collecting and paying the taxes, and it is not responsible how those taxes are used.
I am sure that other readers from Romania will appreciate the large, and diverse library available through Kobo, and contribute to the one trillione minutes of reading, a Kobo initiative meant to revolutionize the time spent reading.