The European Commission is consulting on a review of the current register of reduced VAT rates with a view to modernising the outdated list of reduced rate and exempt products, including technology-related products such as ebooks.

The review of technology-related VAT issues covers more than e-books but one of the three main principles is that 'similar goods and services should be subject to the same VAT rate and progress in technology should be taken into account in this respect' and this is clearly not the case with ebooks which are essentially the same as the physical product.

The consultation, in line with EU VAT Strategy (IP/11/1508), will look at three key issues, including whether the current reduced rate of VAT on certain products is distorting competition within the EU, the actual list of goods and services which benefit from a reduced rate such as utilities and housing, which some believe represent an outdated list agreed many years ago, and a review of how similar goods and services should be treated for VAT purposes, taking into account technological developments.

Algirdas Aemeta, commissioner for taxation, customs, anti-fraud and audit, said: 'It is high time that we take a fresh look at reduced VAT rates. Member States need new revenue sources, while businesses need simpler tax systems with fewer compliance costs. We are asking whether certain reduced VAT rates are delivering what they seem to promise, or whether they pose more problems than they are worth.'

This consultation is part of an assessment process, and the Commission is not proposing the abolition or introduction of any reduced VAT rate at this stage. The results of the public consultation will feed into the preparation of new proposals on VAT rates, which the Commission will present next year.

The consultation closes on 3 January 2013 and is available at the Europa EU website. Download the consultation papers here.