VAT: Commission announces proposal on reduced rates for e-publications

With a couple of weeks of delay, the European Commission released its Communication on an action plan on VAT entitled “Towards a single EU VAT area – Time to decide”.

The text announces several initiatives to modernise VAT rules, including notably urgent measures to tackle VAT fraud and a modernised rates policy. On this point, the Commission suggests 2 options to Member States:

• either extend and regularly review the list of goods and services that can benefit from reduced rates (annex III).
• or abolish the list and give much more flexibility to Member States.

In both cases, it is suggested that all currently existing reduced rates, including derogations, would be maintained.

While this issue of rates will be treated in the context of a broad VAT rates reform in 2017, Commissioner Moscovici announced that a separate proposal would be published this year on e-publications (digital books, magazines and newspapers).The Commission press release explains that the proposal will “ensure that e-publications can benefit from the same reduced rates as physical publications”. EMMA welcomes this announcement and asks its members to support the idea of a specific proposal for the digital book and press sectors towards their national government. Indeed, there is hope that we could witness rapid progress on the case since it will be separated from the broad VAT reform.