Since their advent, eBooks have been subject to Value Added Tax and – for the same amount of time – there have been cries and petitions to scrap this so-called ‘reading tax’.
For partially sighted and blind people in particular, eBooks (and audiobooks) are the only way some people can read, and the inclusion in many e-reading devices of typefaces that are easier for dyslexic people to read is a huge boon to people who would otherwise struggle with the typefaces chosen by the publisher. But it’s not just these people who suffer for the VAT on digital publications; small publishers and authors who are just starting out also reap the consequences. But why is there VAT on eBooks (and audiobooks) when there isn’t VAT on their printed counterparts?
To start at the beginning, VAT is a tax added to goods and services. The UK’s standard rate is 20% and applies to most goods and services. A reduced rate of 5% applies to certain things e.g. children’s car seats and home energy and a 0% rate exists for most food and children’s clothes – and printed books, magazines and newspapers.
Controversially, the digital versions of the printed books, magazines and newspapers are not exempt, though the rate they’re charged at varies by country, with only Norway setting its rate at 0%. So why are the digital versions not exempt? This comes down to the classification of eBooks as an ‘electronic service’, which aren’t eligible for VAT reductions. When the UK entered the EU in 1973, it negotiated a zero-rate on books, but with the agreement that no new products or services could be zero-rated.
In 2017, new European legislation cleared the way for the 20% tax on eBooks to be lifted, with many countries already announcing plans to lower taxes on digital publications. The UK has yet to follow suit.
One problem with the proposal to cut VAT on eBooks is that it would reduce the UK government’s income by approximately £200 million per annum and, with Brexit still far from ‘done’, the government needs to keep hold of all the capital it can until things settle down.
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Frequently Asked Questions
What is the current UK VAT rate on eBooks?
In the UK, eBooks are classified as an “electronic service” and are subject to the standard VAT rate of 20%. This contrasts with printed books, magazines, and newspapers, which are zero-rated for VAT purposes. This discrepancy has been a source of ongoing debate in the UK publishing industry.Why are printed books VAT-free but eBooks are not?
Printed books received a VAT zero-rating when the UK joined the EU in 1973. However, the agreement stipulated that no new products or services could be zero-rated. Since eBooks did not exist in 1973, they were later classified as “electronic services” and fell outside the zero-rate exemption — leaving publishers and consumers to pay the full 20% VAT.What is the “reading tax” campaign?
The “Axe the Reading Tax” campaign is a long-running UK initiative by publishers, authors, and accessibility advocates calling for the removal of VAT on eBooks and audiobooks. The campaign argues that the tax disproportionately affects blind, partially sighted, and dyslexic readers who rely on digital formats as their primary means of reading.Have any countries removed VAT on eBooks?
Norway set its eBook VAT rate to 0%, making it the only country to fully exempt digital books from tax. Several EU member states have reduced their eBook VAT rates following 2017 legislation that allowed member states to apply reduced rates to digital publications. The UK, however, has not yet followed suit.How does eBook VAT affect independent authors and small publishers?
eBook VAT increases the retail price of digital titles, reducing price competitiveness compared to print and international markets. For small publishers and independent authors already operating on tight margins, the 20% tax represents a meaningful reduction in net revenue — particularly for lower-priced digital titles where margins are thinnest.
