After the Directive (EU) 2018/1713 entered into force at the end of 2018, a wave of adoption of reduced rates of VAT on digital publications followed across Europe; made possible by the Directive. Up to May 2020, this resulted in 18 Member States, as well as several EEA and candidate countries, applying reduced rates of VAT to digital publications. This also includes the UK, with the largest e-book market in Europe. The last twelve months have seen discussions in countries that still have not taken up the possibility, though no permanent changes have been made. However, the COVID-19 crisis has prompted several governments to implement temporary measures, including the decrease of VAT rates applying to all books from both standard and already reduced levels.

FEP campaigned unrelentingly for the Directive on VAT rates on e-publications to be proposed by the Commission and to be endorsed by the Member States. Since its entry into force, FEP has been gathering information on implementation at national level and supporting its members on interpretation and in discussions with their respective governments. We will keep doing so in order to maximise the uptake of reduced or zero rates on books and journals.

The possibility to apply reduced rates of VAT to books has been enshrined in European legislation (and in that of many Member States) for a long time, in recognition of the cultural, social and economic value of books and reading. FEP relentlessly supports this attitude and encourages its preservation and expansion.

The option, of course, applied first to print publications and was widely taken up: today 25 out of 27 EU Member States allow reduced or zero VAT rates on printed books, as well as the UK, EEA members Iceland and Norway, and candidate country Serbia. Due to the nature of fiscal law, as the book evolved with technology and embraced new formats and supports, the inclusion of new types of books in the scope of reduced rates required legislative changes.

In May 2009, a new Directive on VAT rates extended the possible application of reduced rates to books on all physical supports, such as CDs, DVDs, USB sticks. However, it excluded downloads and online access, which as electronic services must normally be taxed at the full rate. As of April 2021, 19 Member States have taken advantage of this provision. However, differences remained in the fiscal treatment of books based on their format and means of delivery. FEP started an extensive campaign, cooperating with representatives of magazines and newspapers, and for years advocated for the VAT framework to be adapted to technological progress. The European Commission showed awareness of the issue, but the services in charge of taxation had a negative stance toward the use of reduced rates. Nonetheless, pressure mounted, and the Commission increasingly looked at the different treatment of print and digital publications. The European Parliament repeatedly expressed support for the cause, whereas Member States had diverse views. As discussions continued, some Member States took the initiative.

As of January 2012, France and 26 Luxembourg began applying reduced VAT rates to all kinds of books, regardless of the support. In July 2012, the Commission commenced an infringement procedure against them and in 2013, referred the matter to the Court of Justice of the EU, which ruled against the two Member States in March 2015. Meanwhile, in January 2015, Italy began applying reduced rates of VAT on e-books as well; while Luxembourg re-established the standard rate in May 2015. The Juncker Commission started in 2014 with a cautious approach, which gradually evolved into increasing support, manifested in several high-level declarations in 2015.

The Commission’s Action Plan for a definitive VAT system of April 2016 announced that the specific issue of e-publications would be addressed in a proposal under the DSM Strategy; the Council invited the Commission to put forward its proposal, which it did in December. Shortly after, in March 2017, the European Court of Justice ruled that the VAT discrimination was justified under the current legislative framework. In June 2017, the European Parliament adopted a consultative report fully in support of the Commission’s proposal. Political infighting on a different file kept the proposal blocked in the Council for almost two years, despite broad support among Member States. Finally, in October 2018 the Council reached a political agreement, which was adopted in November. Council Directive (EU) 2018/1713 of 6 November 2018 amending Directive 2006/112/ EC as regards rates of value added tax applied to books, newspapers and periodicals, entered into force on 4 December 2018.

Reduced VAT can now apply to the “supply, including on loan by libraries, of books, newspapers and periodicals either on physical means of support or supplied electronically or both (including brochures, leaflets and similar printed matter, children’s picture, drawing or colouring books, music printed or in manuscript form, maps and hydrographic or similar charts), other than publications wholly or predominantly devoted to advertising and other than publications wholly or predominantly consisting of audible music or video content.” Reduced rates on e-publications are optional. Super-reduced and zero rates are only available in Member States that already had them when the new Directive was proposed. Adoption of the Directive is now widespread, with 23 countries applying reduced rates to e-books among EU Member States, candidate countries and the EEA.

In a few cases, the decision was made in the framework of measures to face the COVID-19 crisis. In addition, several countries have taken temporary measures to tackle the COVID-19 crisis, affecting the rate that applies to books (Germany) or targeting books directly with specific reductions 27 (Austria, Bulgaria – the latter having adopted for the first time a reduced rate of VAT for books).