By Siobhan O’Leary

In several European countries, books are subject to a reduced VAT rate in light of their status as a “cultural” product. This has been complicated by the emergence of e-books, which tend to be viewed as electronic products for taxation purposes and are thus subject to full VAT (19% in Germany, as opposed to the reduced rate of 7%). As a result, there are cases when the end customer pays more for an e-book than for its print counterpart, simply because of the VAT discrepancy.

Though the issue has not yet been resolved in Germany, representatives of France’s Senate and National Assembly have now ruled in favor of applying a reduced VAT of 5.5% to e-books. However, much to the chagrin of publishers and customers alike, the new policy will not go into effect until January 2012.

The Spanish government passed a similar measure exactly a year ago, proposing a reduction of the e-book VAT to 4% — the same rate as for paper
books. Can Germany be far behind?