France to Reduce VAT on E-books to 5.5% Starting in 2012

In Global Trade Talk by Siobhan O'Leary

By Siobhan O’Leary

france

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?

About the Author

Siobhan O'Leary

Siobhan O’Leary is a literary agent, translator and writer based in Berlin. She previously worked in the Foreign Rights department of the Crown Publishing Group (Random House) and at the publishing consulting firm Market Partners International.