“VAT on e-Books, Simply Indefensible, “ Says North East MEP

1nd February 2012

The most senior MEP in the North East Region, Labour’s Stephen Hughes has written to the European Commissioner for the Digital Agenda, Nellie Kroes, to express his opposition to the levying of VAT on e-books in the United Kingdom `and seeking her support for proposals to include e-books in the exemption already allowed for traditional books.

The UK Government are blaming the EU for the fact that e-books are subject to VAT. VAT rates vary widely, from 15% (the minimum set by the EU rules) in Cyprus and Luxembourg, to 25% in Denmark, Hungary and Sweden. Countries are allowed to grant exemptions and reduced rates on certain categories of goods and services, such as children's clothes, books and food, and there are wide differences in how these are used.

Stephen Hughes also indicates that he has learned that the EU Taxation Commissioner has been engaged in a study examining VAT differences throughout the European Union and that Commissioner Semeta is engaged in discussions with the UK and other member states on areas where VAT exemption rules may be reviewed. Mr. Hughes has been told that no firm proposals have been agreed at this stage. He has requested that Commissioner keep him informed of progress made on this subject.

In other EU countries, the situation is interesting. From 1st January 2012, Luxembourg started applying a “super-reduced 3% VAT rate” on electronic books. Luxembourg's move, which is contrary to EU regulations that currently don't permit e-books to be exempted from the full rate of VAT, mirrors that of France, which also started to apply the lower rate of VAT on e-books from 2012. French ministers have told publishers that the State will pay any fines levied by the EU.

Speaking today, Stephen Hughes said:--. “Isn't it just common sense to think that e-Books should benefit from the same reduced VAT rates as physical books? I think so

“I will continue to fight for this ridiculous discrepancy in the VAT regime to be changed.”