On Taxing eBooks as Print Books: Why Are Books Taxed at a Lower Rate?
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.There’s been much talk (going back
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.