Introducing Reduced VAT Rates for Digital Products
Digital products, or electronically supplied services as they are officially called, are gaining attention with more governments across the EU. Several member states have a reduced VAT rate for e-books or e-periodicals.Matthias Hagemann
Published July 3, 2019
Finance ministers in the EU are set to take the bloc’s tax rules further into the digital age by allowing reduced value added tax (VAT) on eBooks and ePeriodicals.
Several years of campaigning to get eBooks taxed at the same rate as printed books in the EU has finally paid off. Since at least 2015, the industry began pressuring the EU to adopt a lowered tax rate for digitally supplied books. Publishers are now asking the UK to also lower its tax on eBooks, which are currently at 20% (while printed books are not taxed at all).
The following VAT changes for digital products are in effect with a few member states imposing conditions. EU member states have a dedicated goods and services category for eBooks and audiobooks.
|Country||Category||VAT Rate Change|
|Belgium (BE)||eBook||Reduced Rate 6%|
|Croatia (HR)||eBook||Reduced Rate 5%|
|Finland (FI)||eBook||Reduced Rate 10%|
|France (FR)||eBook||Reduced Rate 5.5%1|
|ePeriodical||Reduced Rate 2.1%2|
|Ireland (IE)||Audiobook||Reduced Rate 9%|
|eBook||Reduced Rate 9%|
|ePeriodical||Reduced Rate 9%|
|Italy (IT)||eBook||Reduced Rate 4%3|
|Lithuania (LT)||eBook||Reduced Rate 5%|
|Luxembourg (LU)||eBook||Reduced Rate 3%|
|Malta (MT)||eBook||Reduced Rate 5%|
|Poland (PL)||eBook||Reduced Rate 5%|
|Portugal (PT)||eBook||Reduced Rate 6%|
|Sweden (SE)||Audiobook||Reduced Rate 6%|
|eBook||Reduced Rate 6%|
|ePeriodical||Reduced Rate 6%|
1 20% applied to books, newspapers and periodicals containing mainly publicity, private advertisements, obscene or pornographic material. 2 eNewspapers. 3 4% only for eBooks which have an ISBN (International Standard Book Number), otherwise the standard rate of 22% applies.
You can review official EU VAT rates in the Taxud.c.1 (2019) PDF published by the European Commission. Vatstack continues to observe future developments of VAT rate changes in the digital products category.
More Countries Plan to Reduce Rates in 2020
Several more countries in the EU are expected to reduce rates on eBooks. Here’s the list of changes we know of so far:
|Country||Category||VAT Rate Change||Date|
|Austria (AT)||Electronic Publications||Reduced Rate 10%||2020-01-01|
|Estonia (EE)||Electronic Publications||Reduced Rate 9%||2020-05-01|
|Czech Republic (CZ)||Electronic Publications||Reduced Rate 10%||2020-05-01|
|Germany (DE)||Electronic Publications||Reduced Rate 7%||2020-01-01|
|Netherlands (NL)||Electronic Publications||Reduced Rate 9%||2020-01-01|
|Slovenia (SI)||Electronic Publications||Reduced Rate 5%||2020-01-01|
|Spain (ES)||Electronic Publications||Reduced Rate 4%||2020-04-22|
|United Kingdom (GB)||Electronic Publications||Reduced Rate 0%||2020-05-01|
New Digital Product ‘Categories’ Field
We plan to add more categories that are relevant for digital products as time progresses and as lawmakers introduce corresponding VAT rates across the EU.
If you want to show and apply the correct VAT rate for digital products during your customer’s checkout process, you can even geolocate your customer by their IP address. The quotes endpoint is perfectly suitable because it dynamically determines the applicable VAT rate based on your business’s and your customer’s locations.