Skip to main content

On Taxing eBooks as Print Books: Why Are Books Taxed at a Lower Rate?

11431742405_09247fa99e_bThere’s been much talk (going back 4 years or more) that in the EU ebooks should be taxed the same as paper books. Several EU countries lowered the taxes they collected on ebooks and were then rebuked by the ECJ, there have been calls for lower rates, and French publishers have even launched a social campaign.

But as Baldur Bjarnason reminded us this morning, no one has explained how that is supposed to work. What’s more, I can’t recall that anyone has ever explained why books deserve a lower tax rate.


The problem is that defining all digital media as services is exactly what a technology-neutral regulation looks like. All digital content has the same VAT. Nobody has clearly outlined how you can define ebooks as special without discriminating against other digital media, other methods of publishing digitally, other digital textual media, or the various kinds of self-publishers.

So, how is it supposed to work?

Software, ebooks, digital video and audio, and websites are all defined in terms of EU tax law to be digital services.

To those who want to lower VAT on ebooks but not on digital media in general, how do you propose to decide which is which?

Pelican Books online ebooks, high VAT service or low VAT ebook?

Directly sold PDFs like Amy Hoy’s JFS, high VAT service or low VAT ebook?

Single book app like Joseph Albers’ Interaction of Color, high VAT service or low VAT ebook?

He’s not wrong. As it stands, the taxation issue is already causing problems as publishers argue with tax assessors on the point of physical vs digital delivery, and extending the lower VAT to ebooks would simply cause more problems.

It might be better to simply stop regarding books as special snowflakes and instead start collecting the higher VAT. I know that is antithetical to the position of almost every one in publishing, but once we start asking why certain types of media get a reduced VAT and not others, it’s clear that there is no good explanation.

  • Why is a book or a song deserving of a lower tax rate, and not the movie or app based on the same story?
  • Why does Snooki’s biography get the lower tax rate, and not Schindler’s List?
  • And why is  a book taxed at the lower rate, and not the same story when it is sold as an audiobook in iTunes?

As I see it, Baldur’s point (deciding which content gets the lower VAT) has already resulted in some ridiculous situations. There’s no need to ask how a change to the VAT is going to work; the current situation is already flawed.

If you really want to fix it, why not raise taxes on books instead of lowering them on ebooks? If nothing else, it would cause fewer complications.


image by GotCreditLendingMemo

Similar Articles


Doug May 4, 2015 um 12:48 pm

Taxation on "merit goods" like books is, to a considerable extent, an historical artifact. But I believe that the basic concept is that merit goods are those things (food, medicine, etc.) that are considered fundamental needs regardless of income level — sort of the opposite of luxuries.

SAD May 4, 2015 um 3:24 pm

Print books have a lower VAT in order to promote literacy. Since e-books are also meant for reading, they should be treated the same. Neither an audiobook, nor a movie based on a book is meant for reading, therefore they do not need to be treated the same. Simple.

Rob Siders May 4, 2015 um 4:53 pm

I don’t think a reason for why ebooks should have special status alongside paper books is all that relevant. It makes for interesting reading, but the reason why laws favor some things and not others is sometimes arbitrary. Many moons ago I remember learning in a First Amendment law class that the reason speech on broadcast TV can be regulated—while written and spoken speech is largely unregulated—by the Federal government is because, well, they can. Sure, there’s a legal rationale (the government licenses the public airwaves, the pervasiveness of broadcast, blah blah blah), but an equally compelling opposite case can be made just as easily.

jjj May 4, 2015 um 6:21 pm

From a practical point of view that might be tricky , would be rather harsh on students and that’s a bit suicidal for politicians.
Copyright kills access to culture as it is (and some would argue culture itself), why make it harder to buy books just because it’s the easiest way to fix a wrong in this legal context. it’s a bit like killing the patient to get rid of the disease.

Mark May 5, 2015 um 6:54 am

As SAD said, books promote literacy. Therefore, both paper books and ebooks should have the lower rate of tax. Or not tax.

Loïc May 6, 2015 um 12:28 pm

The explanation is quite simple: you cannot even possess an ebook. What we call ebook on merchant websites is a limited contract (or licence) with the publisher to access the text of the book on a specific range of devices and/or in a limited list of countries. The contract cannot be transfered to another one. This contract is a limited service, not an ownership contract and thus it is taxed as a service.
You can sell a contract under some conditions, but these contracts are designed not to be transferred to another owner. If you die, nobody is allowed to take possession of your digital books. It is contractually not a book.

SAD May 7, 2015 um 3:24 am

Yes, you can possess an e-book. Granted, not every publisher will let you, but some (like Tor) do.

Mike D May 10, 2015 um 6:51 pm

One answer to the triumphant and perennial "where do you draw the line" is the one the Italians chose, if it has a ISBN then it’s a book, if it hasn’t it’s a audio or multimedia experience.

VAT is full of lines being drawn, Google the UK’s "Jaffa Cake is not a biscuit" saga.

Baen and Tor "You buy it it’s yours" which is as near ownership as a cluster of electrons being inconvenienced can be.

Write a Comment