Spain Raises eBook VAT to 21%

The Government in Spain has increased the VAT tax on ebooks to a whopping 21%, while printed books are consistent at 4%! In 2009, Spain lowered the VAT rate on ebooks to a very reasonable 4% and an entire digital industry was born. The country is facing tough economic times and has decided to increase it again. Why the large gulf between the printed variant and the digital format? Printed books are considered “cultural goods” and therefore are immune to the increases you will soon be paying for ebooks from any provider in Spain.

The increase in tax will hamper growth in that country as people will consider doing business outside their country. This might be a boon for Amazon, which bases their European headquarters out of Luxemburg, where they can offer ebooks to many markets at a rock bottom VAT rate. This is mainly how customers can buy books in the UK and only pay a pittance in taxes, the same can be applied to Spain.

Publishing Perspectives interviewed Antonio María Ávila, executive director of the FGEE (Federation of Spanish Publishers Guilds), was swift to state that the government had been “kind” to the book industry. He’s also convinced that the e-book VAT rate is a dispute to be solved by Europe as a whole, not a Spanish problem in particular. “Our battle is to get Brussels to consider e-books as books, because now they are judged to be a service,” he said, in a statement to the press. “It’s a very current matter that leads us down other paths,” he added, to underscore that as far as the Spanish authorities are concerned, the industry is satisfied—that is, a good deal for print books is enough.

Michael Kozlowski (7736 Posts)

Michael Kozlowski is the Editor in Chief of Good e-Reader. He has been writing about electronic readers and technology for the last four years. His articles have been picked up by major and local news sources and websites such as the Huffington Post, CNET and more. Michael frequently travels to international events such as IFA, Computex, CES, Book Expo and a myriad of others. If you have any questions about any of his articles, please send Michael Kozlowski an email to michael@goodereader.com

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Tim

There are a few misrepresentations in the article. Spain did not specifically raise the VAT on ebooks, they raised their “general” VAT from 18% to 21%. Since ebooks fall under the domain of the “general” VAT this applies to them as well. European treaties only allow applying the “reduced” VAT to printed books. The increase won’t necessarily lead to higher ebook prices as VAT is already included in the posted prices. However publishers might choose to increase prices to maintain their profit margin.

Luxemburg is actually breaking european law by only charging a 3% VAT for ebooks. So is France by charging a reduced VAT of 7%. Luxemburg has a long history of helping companies and rich people dodge taxes. Since some of the other loopholes are closed they now focus on the VAT. The nice thing for Luxemburg is that when they are brought to justice for breaking european law the “penalty” will probably be that they have to retroactively collect the rest of the taxes (and keep the money). The VAT loophole will close in a few years when the VAT will be collected by the country where the consumer resides.