During its meeting of October 2, 2018 the Economic and Financial Affairs (ECOFIN) Council came to a political agreement on a proposal allowing member states to apply reduced, super-reduced or zero VAT rates to electronic publications, thereby allowing alignment of VAT rules for electronic and physical publications.
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 as agreed upon by the ECOFIN Council 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 European Commission has issued proposals for the new system, which would allow member states more flexibility than at present in setting VAT rates.
According to a press release issued by the ECOFIN Council, the directive is expected to be adopted without further discussion once the text has been finalized in all official languages.
Click here to be forwarded to the text of Proposal for a Council Directive amending Directive 2006/112/EC, as regards rates of value added tax applied to books, newspapers and periodicals as agreed on by the ECOFIN Council on October 2, 2018.
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