By a vote of 590 to 8, with 10 abstentions, the European Parliament has formally agreed to allow Member States the option of applying reduced VAT rates on electronic books, newspapers and periodicals. This proposal, as put forth by the European Commission, is designed to bring the VAT treatment of e-publications in line with the VAT treatment of printed publications. Under the EU VAT Directive, Member States are currently allowed to apply reduced rates or even zero-rates to printed material, but must apply standard rates to all “electronically supplied services,” including e-publications.
The VAT rate on e-publications has long been a contentious issue in the European Union, and various Member States have lobbied for the ability to reduce-rate these items. The Commission’s proposal is scheduled to be heard by the European Council on June 16 for final approval.