At Budget 2020 it was announced that from 1 December 2020 e-publications will be zero-rated. This measure was fast-tracked forward to a new commencement date of 1 May 2020 due to the Coronavirus lockdown.

In 2018 the Council of the European Union amended Directive 2006/112/EC to enable EU member states to apply reduced rates of VAT to electronically supplied publications. The measure is in line with the communication of the Commission of 6 May 2015 on a Digital Single Market Strategy for Europe and is in order to keep abreast of technological progress in a digital economy.

Group 3 of Schedule 8 to the Value Added Tax Act 1994 ('Group 3') provides for the zero-rating of printed matter.

Legislation will be introduced by statutory instrument to amend Group 3.

Subject to certain exclusions, the legislative changes will zero rate supplies of e-books, e-booklets, e-brochures, e-pamphlets, e-leaflets, e-newspapers, e-journals and e-periodicals and magazines as well as electronic versions of children’s picture and painting books.

Exclusions are e-publications that are wholly or predominantly devoted to advertising or to audio or video content.
The sale of e-audio books continues to be standard rated in UK law in line with government policy.

Legislation was introduced in the Finance Act 2011 to counter avoidance schemes entered into by some businesses that artificially split supplies so that they could benefit from the zero rates for printed matter. The new legislation will ensure that businesses will not be able to enter into similar schemes when e-publications become zero-rated.

Previously books, newspapers and periodicals were zero-rated for VAT but electronically supplied publications were standard rated.

Whilst several member states including France and Italy announced that they would lower their rates, the UK did not.

Following the decision by the Upper Tribunal (UT) in News Corp UK & Ireland Limited v HMRC [2019] UKUT 0404, where the tribunal found that digital newspapers were zero-rated like their printed counterparts, HMRC issued a policy paper confirming their policy that such digital publications are standard rated. They also appealed the UT decision.

At Budget 2020 it was announced that from 1 December 2020 a zero rate of VAT would apply to e-publications, to ensure that e-books, e-newspapers, e-magazines and academic e-journals are entitled to the same VAT treatment as their physical counterparts. The government will be consulting on the details of the legislation ahead of its implementation.

External Links

1 May 2020 Zero Rating e-publications

EU Council Directive 20148/1713

Zero-rating books and printed matter (HMRC VAT Notice 701/10)

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