PPA praises EU Decision to Reduce VAT Rates for Online Publications
PPA has welcomed a landmark EU decision to allow European Member States to apply lower VAT rates to e-publications such as electronic books, newspapers and periodicals.
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As it currently stands in the UK, print versions of magazines, newspapers and journals are zero-rated for VAT. Digital versions of those same publications, however, are currently subject to standard-rate VAT of 20 per cent, and the zero-rate cannot be applied due to EU law.
PPA Managing Director, Owen Meredith commented: “PPA has long campaigned for a change to these out-dated tax rules, which have fundamentally failed to keep up with innovation in technology and the multi-platform distribution of magazine media and business information content.
“Publishers curate and deliver content to readers across platforms and the tax system should not penalise one form of delivery over another. This EU Directive is a victory for common-sense and now gives the Chancellor the ability to act in his Budget later this month to final abolish the reading tax.”
The Economic and Financial Affairs Council (Ecofin) adopted the proposal last week to amend the existing EU VAT Directive. The current VAT Directive (2006/112) aims to bring a levy of harmony to consumer taxes across the EU to avoid distorting the Single Market through taxation, and expressly prohibits digital publications from benefiting from reduced VAT rates.
PPA has been at the forefront of the campaign by European press publishers lobbying for change in Brussels for over a decade. The Directive, which will come into force later this month, will give the UK Government the ability to extend zero rating for print publications to their digital siblings.
Owen added: “Ending this outdated digital-penalty will benefit consumers and allow publishers to invest in quality journalistic content. In an era of fake news, where we know magazine media is trusted highly by consumers, the Chancellor should adopt this change at the earliest possibility, and end the tax penalty on digital readers."
The decision will enable Member States to apply the same VAT rate for online content as printed content, which could potentially save the news media industry and consumers millions annually. Moreover, the move could lead to wider societal benefits including educational, such as better rates of literacy, as well as wider cultural enrichment.
The passing of the Directive is viewed as a vital step towards assuring media pluralism across Europe, as well as creating a foundation for freedom of opinion and democracy in the digital world. It also emphasises press freedom as one of the essential values of European democratic societies and will have a serious impact on the sector’s sustainability.
It will come into force on the 20th day after publication in the Official Journal, for Member States’ implementation.