With 2015, a new European Community regulation come into being, stating that VAT on digital contents will be calculated based on the country of purchase.
This is extremely stupid – as it hits small businesses, cottage companies and small publishers, forcing them to keep a separate accounting for VAT based on the countries in which their products are sold.
This, because European Community countries do have each a different VAT regime for digital contents – ranging fro 4% to 23%.
The new rule was apparently introduced to solve the problem of Amazon’s tax dodge (Amazon being VAT-registered in Luxembourg) but the effects are horrid – and do not hit Amazon, but readers and publishers.
In Italy – where I live – VAT for ebooks used to be a staggering 22%.
No matter where I purchased my ebooks, that would be the extra for me to pay.
But in an eleventh hour decision, the Italian government decided to yield to the pressure of the campaign called #unlibroèunlibro (a book is a book), and the VAT for ebooks was lowered to 4% – the standard VAT for books in Italy.
But there’s a catch – the 4% VAT applies only on ebooks with an ISBN. Ebooks without ISBN – to wit, any ebook self-published through Amazon KDP, which caries only an ASIN code – will still be taxed 22%… just like an mp3 file or a digital stock photo.
This double standard means not only that, for Italian readers, my self-published books will be much more expensive than traditionally-published ebooks – de facto killing my sales – but also that indie and self-produced ebooks by other authors will cost much more for me – thus causing me to reduce my purchases of independently-published contents.
The double standard hits both authors and readers, in other words.
Already many publishers are waging a price-war on self-publishers, by selling novels at 99 cents – and already a part of the readership is clamoring against short stories and novellas sold by indies at 99 cents… sold “at the price of a novel”.
This new regulation is another nail in the coffin of self-publishing, small presses and an evolution of the book market.
In Italy, a book is a book – but only if it’s been published by a major.
Like Randy Newman used to sing, they’re trying to wash us away.