Europe agrees to reduce VAT on digital publications

The 28 member countries of the European Union (EU) agreed on Tuesday to authorize member States to apply reduced, highly reduced and even zero VAT rates on digital publications.

It took almost two years for the 28 to agree on the proposed directive presented on 1 December 2016 by the European Commission.

The main idea of this initiative, strongly supported by France and Germany, is to align VAT rules for digital publications – online books and newspapers – with those that apply to their printed equivalents at a time when paper is being replaced increasingly by screens of all types, from smartphones to e-readers.

Proposals on fiscal matters need to be approved unanimously at the EU, which makes reforms in this area more difficult. The European Parliament, for its part, has the possibility of issuing opinions, but these are not binding, since fiscal matters are the purview of the member States.

The European Commissioner for Economic Affairs, Pierre Moscovici, welcomed the agreement, which was reached by the Finance Ministers meeting in Luxembourg. Describing the agreement as a real step forward, he added: “We need to live with our times and know that a book is a book whatever the medium it is written on.”

He noted that the measure would support creation, press freedom and freedom of the media, so its adoption was a very important moment.

France had already decided in 2014 to lower VAT on online newspapers from 20% to 2.1%, as had been done before for the printed press, so as to support an economic model that is still fragile.

France’s move, which had irked the European Commission at the time, had been followed by requests for similar treatment by online information sites such as Mediapart.

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