Books connect people across the world, but sometimes money and taxes can hinder the sale of ebooks. For authors and publishers, this can make locating readers in other countries exceptionally difficult.
Starting in 2015, the European Union began adding a Value Added Tax (VAT) to the sale of ebooks. VATs are extra taxes added to a consumer’s price of a good and are intended to ensure that end users rather than intermediary sellers pay the most taxes on products. Though VATs vary by nation, they cause some readers in the EU to pay up to 25% more than the list price of an ebook. Ignoring conversion rates, this could increase the cost of an ebook from $3.99 to $4.99 or from $4.99 to $6.24.
Since 64% of readers prefer to pay $3.99 or less for ebooks, VATs affect up to 2/3 of the ebook market in the EU. Though the EU has the largest example of these taxes, other countries have begun to include them as well. Japan added an 8% consumption tax to Kindle ebooks for example, and 69% of countries surveyed apply the standard (i.e. high) VAT to ebooks.
For authors, these numbers can be heartbreaking. Often writers have friends throughout the world who would love to purchase their books for a reasonable price. Unfortunately that isn’t always possible.
What does this mean for independent authors and presses in the future? Honestly, I don’t know. Currently only 22% of countries apply a VAT to printed books, so authors could focus on physical rather than electronic copies of their books. They could also price international ebooks slightly lower in order to account for the higher taxes though this could feel unfair to domestic readers.
Regardless, VATs and their applications are things that authors, publishers, and readers need to keep an eye on. They will continue to alter the book loving community for years to come.
If you’re interested in learning more, check out the International Publishers Association’s 2015 report “VAT/GST on Books & E-books: An IPA/FEP Global Special Report”. It’s a fairly short read and can offer some guidance in case you are deciding how to price ebooks in various iterations of Amazon or other e-retailers. I’d also love to hear if any readers from countries that use VAT have noticed it changing how they buy books. International taxes may not be one of the things that people like to think about, but in our increasingly connected and digitized world, dealing with them is unavoidable.
Image Attribution: Erdglobus mit Wappen des Salzburger Erzbischofs Sigismund Christoph von Schrattenback (1753-1771), Salzburg Museum