Zero VAT on e-books during COVID-19 crisis

The zero rating of e-books is welcome at time when more people are reading on line, but not all e-publications will benefit, said leading tax and advisory firm Blick Rothenberg.

Alan Pearce, VAT partner at the firm said: ‘This has been brought forward due to the outbreak of COVID-19 pandemic and the current lock down requiring people to stay at home.’

He added: ‘The zero rating of e-books, was originally planned to take effect from 1st December 2020, has been brought forward to today so that there is a reduced cost to access online publications at a time when many people are confined to their homes and schools and libraries are closed.’

Antje Forbirch, VAT Director at the firm said: ‘This alignment of the VAT treatment for physical and digital publications will be welcome news for publishers and consumers, provided the VAT saving is passed on to end consumer.’

She added: ‘However, suppliers will need to review their offering as not all e-publications will benefit from the zero rate. E-publications that are predominantly (i.e. more than half) devoted to advertising or contain audio and or video content, and audio books themselves, will remain subject to the 20% rate of VAT.’

Alan stressed that: ‘Suppliers will need to quickly adjust their VAT accounting systems. Furthermore, where subscription services for e-books have been invoiced in advance and VAT has already been paid upfront.

HMRC will allow suppliers to issue credit notes and refund the VAT to consumers for the proportion of the annual subscription that runs beyond 1st May 2020.’


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