The Republic of Ireland has reduced VAT (value-added tax) on ebooks from 23% to 9%, effective from January 1, 2019.
The move follows a decision by the European Union in October last year to allow member states to align the VAT rates for ebooks with the lower rates generally charged on print books.
Previously, EU states had to set the VAT rates for ebooks at the country’s standard VAT rate, so, for example, the UK slaps 20% on ebooks although print books enjoy a 0% rate.
The EU believes the decision will ensure an equal tax treatment of paper and digital products in the development of the digital single market in Europe.
But there is a problem in actually lowering the cost of ebooks to Irish customers as Amazon, despite having a substantial headquarters in Dublin employing over 3,000 people, does not provide a specific Kindle store for Ireland and instead funnels them through Amazon.co.uk.
To pass on the Irish VAT cut would mean lowering the price of your Kindle ebook for the whole of the market on Amazon.co.uk, which would obviously have an impact on your revenue as VAT on ebooks in the UK is still set at 20%.
Amazon comments, ‘If most of your Amazon.co.uk sales are to customers in Ireland, we encourage you to lower your British Pound (GBP) price to pass the savings on to customers in Ireland.’
That has got to be a very niche market and indeed there’s no certain way of knowing how many sales you make in Ireland as the Amazon sales reports only cover the national Kindle stores, so Irish sales would be included in the Amazon.co.uk figures.
Amazon must have a way of splitting out the VAT for Irish customers or they would all be contributing to the UK’s national coffers by paying 20% VAT rather than their own country’s tax rate, so the company should also be able to offer an alternative pricing option for ebooks.
If you’re going ‘wide’ outside Amazon, I don’t believe that any of the main retailers or distributors offer a separate option for Ireland pricing, so at present the VAT reduction, which applies to all digital publications, is unlikely to be of much benefit to ebook customers in Ireland.