On 6 November 2018, the Council adopted a directive allowing alignment of VAT rules for electronic and physical publications. From now on, member states will be able to apply reduced, super-reduced or zero VAT rates also to electronic publications.

The adoption of the e-publication directive follows the political agreement reached by the Council on 2 October. It opens up the possibility for member states to implement reduced VAT rates in their national law if they wish to do so.

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 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 Commission has issued proposals for the new system, which would allow member states more flexibility than at present in setting VAT rates.