The new [EU] VAT laws will prevent Amazon, Nook and Kobo from getting away with charging a paltry 3% tax on eBooks, magazines, graphic novels and newspapers sold to European countries, because their headquarters are in Luxembourg . . . UK customers will have to pay the 20% VAT on eBooks from Amazon, instead of the 3%. This will increase eBooks accross the board by 17%.
The Luxembourg government stands to lose around €800 million a year from the ruling, while the UK and Germany stand to gain around €350 million each by the higher VAT rates.
One way to avoid paying that extra tax is to use a VPN, although this may not work with Amazon:
If you have never heard of it before, a virtual private network (VPN) allows users to make some small changes to their modem and router. It basically allows you to change your local internet address in your home country, to another. If you live in the UK for example, you can establish a VPN to Luxembourg, and only pay 3% VAT on all of your e-Books.
No VAT is paid on dead tree books in the UK so obviously this is good news for those retailers because that horrible phenomenon where ebooks are priced at the same or higher price than the print version, will worsen. Today I ordered the hardcover edition of The Original Folk and Fairy Tales of the Brothers Grimm: The Complete First Edition translated by Jack Zipes at £16.97. The Kindle edition is currently £15.97, but in the New Year it’ll be more expensive than the hardcover.
While this change benefits traditional publishing, it also hurts indie and self-published authors. More expensive ebooks means either absorbing the increase by lowering prices, or risk fewer sales, as readers are going to be more inclined to choose the cheaper print over electronic content.
image credit: iosphere