Following disputes over the application of VAT at full rate for ebooks, the Commission is consulting on whether to allow member states to apply lower rates of VAT as is the case with printed books, and is considering the future definition and scope of electronically supplied publications with a view to allowing Member States to levy reduced rates or even  zero rates for electronically supplied publications.

At the moment, member states have the option to tax printed books, newspapers and publications at a reduced rate (minimum 5%) and some member states were granted the applications of VAT rates lower than 5% (super-reduced rates) including exemptions with a deductions right of VAT at the preceding stage (so called zero rates) to certain printed publications. In the UK, books and newspapers are zero rated for example.

The increasing impact of digital on publishing is not taken into account so digital publications that are electronically supplied are taxed at the standard VAT rate.

Since 1 January 2015, "place of supply" rules have been in force, which means that VAT on all telecommunications, broadcasting and electronic services is levied where the customer is based, rather than where the supplier is located. Suppliers can therefore no longer benefit from being located in the member state with the lowest VAT rates, for example, basing themselves and billing out of Luxembourg as in the case of Amazon.

The Commission plans to issue a definitive answer with a view to any revisions to legislation by the end of the year, under its 2016 Actions Plan on VAT (Com (2016) 148 final). It has indicated that ‘it will make a legislative proposal in 2016 to allow Member States to apply to electronically supplied publications the same VAT rates that Member States can currently apply to printed publications’.

The closing date for feedback is 19 September.

European Commission Public Consultation on reduced VAT rates for electronically supplied publications is available here