One of the things that has hugely irritated UK-based ebook stores is that, while they have been required to charge 20% VAT on all purchases, multi-national companies such as Apple and Amazon have been basing their European operations in places like Luxembourg where VAT on ebooks is much lower. In order to remain competitive, UK-based stores such as Waterstones (and presumably the Robot Trading Company) have had to swallow the additional tax that they had to pay.
That should now end. As per this report, George Osborne has actually done something to close a tax loophole. In theory, anyone selling ebooks in the UK will soon have to charge UK rates of VAT. I say “in theory” because “soon” happens to be from January 1st, 2015, which leaves Apple and Amazon plenty of time to find a new loophole, or to bribe the government to reverse the decision, but at least it is planned.
Ideally, of course, ebooks should be zero-rate for VAT, just like paper books are. And doubtless this ruling will lead to yet more complaints that ebooks are over priced, and that authors are raking in huge profits (because it is always easier to blame authors than faceless corporations). However, there is potential good news for Wizard’s Tower Books customers.
You see, we are small enough to not have to register for VAT. This costs me a bit of money, but saves me a huge amount of time doing VAT accounts and allows me to offer books for sale without charging VAT. As the EU has recently ruled that the “most favored nation” clauses, used by the likes of Amazon and Apple to prevent other companies undercutting them, are anti-competitive, I should be able to offer books rather more cheaply than you can buy them on Amazon.
From Jan. 1st, 2015. Assuming nothing changes before then.