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EU finance ministers agree lower VAT for e-publications

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EU finance ministers agree lower VAT for e-publications

Photo Lars Curfs

(LUXEMBOURG) - Ministers agreed to allow EU states to apply reduced, 'super-reduced' or zero VAT rates to electronic publications Tuesday, thereby allowing alignment of VAT rules for electronic and physical publications.

E-publications are currently taxed at the standard rate in most EU Member States. At their meeting, the EU's finance ministers agreed that states would be allowed to align the VAT rates they set for e-publications with the more favourable regime currently in force for traditional printed publications.

The proposal forms part of more general efforts by the EU to modernise VAT for the digital economy, and it "enables us to keep pace with technological progress," said Austria's finance minister Hartwig Loeger, for the EU presidency.

Under the current VAT rules (directive 2006/112/EC), electronically supplied services are taxed at the standard VAT rate, i.e. minimum 15%, whereas publications on a physical support may benefit from non-standard rates.

For physical publications – books, newspapers and periodicals – member states currently have the option of applying a 'reduced' VAT rate, i.e. minimum 5%. Some have been authorised to apply 'super-reduced' VAT rates (below 5%) or 'zero' rates (which involve VAT deductibility).

The directive will allow member states that so wish to apply reduced VAT rates to electronic publications as well. Super-reduced and zero rates will only be allowed for member states that currently apply them to 'physical' publications.

The new rules will apply temporarily, pending the introduction of a new, 'definitive' VAT system. The Commission has issued proposals for the new system, which would allow member states more flexibility than at present in setting VAT rates.

The directive will now be adopted without further discussion once the text has been finalised in all official languages.

Text of the directive as agreed

Economic and Financial Affairs Council, 02/10/2018


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