The future landscape and direction of the entire EU-wide register of reduced VAT and exempt-rated products, including technology-related products like ebooks, is set to be revealed in the next few months.

It follows the closure on 3 January of the EC consultative review of technology-related VAT issues. While it covers more than just e-books, one of its three core 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.

Ruth Corkin, who chairs the VPG's National Technical Committee, suspects that "their preferred view will be to bring books up to a standard rate", thereby putting Britain's zero-rate on books, newspapers, and magazines at risk.

Corkin, who heads up accountancy firm James Cowper's VAT practice, said any such move would be likely to provoke the ire of the British government.

She said the UK was justly proud of its zero-rated VAT status, a hard-won concession that it secured when it first entered the EEC, as it was then known, in 1973.

'When we joined the EEC, we said we would not charge VAT on social necessities. However, such derogations are reviewed on a regular basis and I think the UK will fight tooth and nail to keep the zero rate, if it comes under threat.'

A peculiar anomaly of the EU VAT scene is that even "standard rates" - as opposed to "super reduced" or "reduced" rates have no upper limits imposed. Rates range from the lowest at 15% to 27% in Bulgaria.

Corkin goes on to argue that the definition of an e-book 'should be restricted to a book in electronic format consisting of text and/or illustrations in a similar way to that of a printed book. If the product goes beyond a paper book or audio book for the blind and has features such as moving images or performed music, it should be considered to be a supply of electronic services and taxed accordingly. However, if it reflects the qualities of a paper book it clearly makes sense to tax it in the same way as a printed book.'

She said electronic newspapers, magazines, periodicals and journals should be taxed in the same way as their printed cousins "if they have the same characteristics as their traditional counterparts".

'However, given advances in technology, this should not be restricted just to the printed word but also include articles and content that has embedded links and other media that can be accessed at the choosing of the reader to enhance the reading experience,' she continued.

Set against this evolving scenario, is the on-going case of law firm Berwin Leighton Paisner (BLP), which is challenging HMRC in the European Court of Justice, on behalf of an unmanned client, over its decision to charge the standard 20% VAT rate on ebooks while printed books escape the charge completely.

Corkin said she expected the tribunal to be closely watching the outcome of the consultation, before it passes its own judgment.