The new measure will allow Member States to align the VAT rates they set for e‑publications, currently taxed at the standard rate in most EU countries, with the more favourable regime currently in force for traditional printed publications.
The decision means that the unequal treatment of the two products, paper versus digital, becomes a thing of the past. Currently in the UK electronically supplied services such as digital publications are taxed at the standard VAT rate, which in the UK is 20%. This contrasts with traditional media, which is zero-rated.
The directive comes into force on the 20th day after publication in the Official Journal and will allow the UK government and other member states that want to, apply reduced VAT rates to electronic publications. While super-reduced and zero rates will only be allowed for member states that currently apply them to traditional printed media, the move will likely save publishers and news outlets considerable amounts of money.
The move has been praised by publishers and news outlets who see the move as part of supporting the expression of freedom of speech and democracy in and increasingly digital world.
The agreement is part of moves by the EU to ensure that Member States have more flexibility to set VAT rates as they see fit. Other Ecofin agreements which formed part of this announcement included new rules to improve the functionality of the current VAT system until the long-term VAT reform strategy has been implemented.
VAT is complicated, particularly in the context of the EU and with Brexit ahead it’s even more important to make sure your business is properly interpreting VAT regulations. The Bedrock team has a number of VAT experts who can advise, why not get in touch today to discuss how we can assist you or your clients?