VAT on ebooks 2

Further to my earlier post on this subject.

Following ‘s comment, I followed up my email to my MP with similar emails to my MEPs, also using http://www.writetothem.com/.

I’ve had an acknowledgement from my MP’s office, but I know a reply will normally take a few weeks, allowing for Christmas. However, I now have had replies from all but one of the MEPs. These range from brilliant to cringeworthy. On reading one missive, blaming the EU for everyone, I thought “this guy must be UKIP”, and indeed he was.

I got an interesting reply from LibDem MEP, Bill Newton Dunn, who gave me a factual account of the current legal situation on VAT and the EU.

Full marks, though, to Conservative MEP Emma McClarkin, who wrote a concise and very clear email addressing my specific point – how come France thinks they can lower VAT, while our government say we can’t.

The answer is – ironic this, given recent events – France is actually defying the EU, is lowering the VAT rate on ebooks despite there not yet being agreement, and has told the publishers that the French government will pay any fines the EU levies.

More interestingly, Luxembourg is following France’s lead, effective immediately. As the Amazon ebook business is actually based in Luxembourg (which is why we have been paying 15% VAT, not 20%), this means that we should benefit. This is great news for Amazon, and for Amazon customers. This is terrible news for any UK ebook retailers who wish to compete.

Note that there is also a plan to change the member country the VAT rate is based on from that of the supplier to that of the customer. If this happens, it would mean that we would be taxed at the current UK rate instead. However, both bits of legislation are tied together in the same package, so by the time this change is made, the VAT discrepancy issue should be taken care of.

In the meantime, assuming Amazon doesn’t hog the money saved as extra profit – we should now be seeing ebooks from them at just 3% VAT (Luxembourg’s reduced rate).

I wrote back to Emma to thank her, and ask if my interpretation of the Amazon/Luxembourg thing was right. To my surprise, she replied within an hour of my sending my email!

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