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Parliamentary questions
20 January 2011
Answer given by Mr Šemeta on behalf of the Commission

As the Honourable Member correctly explains, pursuant to the EU VAT rates rules currently in force, a majority of Member States apply reduced rates of VAT to newspapers and magazines. Whereas zero rates and reduced rates below the allowed minimum of 5 % constitute exceptions to the general rules on VAT rates, they form part of temporary derogations granted to certain Member States on the basis that such rates were in force before 1st January 1991, and continue to be limited to the goods to which they were applied at the time.

The difference in taxation of online publications (standard rated today) as compared to hard copy publications (reduced rate possible today), is not only the result of the difference in their qualification for VAT purposes, but also in their nature and functionalities. The supply of online newspapers as well as of online periodicals qualify as electronically supplied services to which the reduced rates shall not apply according to the second subparagraph of Article 98(2) of the VAT Directive.

It should be underlined that — according to the EU VAT rules currently in force — any material wholly or predominantly devoted to advertising is explicitly excluded from the scope of the reduced rates. Considering the economic importance of online publications to the advertising industry with its more sophisticated technical possibilities (pop-ups etc.) in comparison to paper-printed products, a coherent application of reduced rates to online products would be more difficult from a practical perspective and thus burdensome for taxpayers and tax administrations.

To take account of new socioeconomic realities and technological developments, which certainly give rise to new challenges in the VAT area, on 1 December 2010 the Commission adopted a consultative Green Paper(1). This Green paper is also intended to initiate a general reflection on the level of future tax harmonisation and will be the appropriate format for all stakeholders to be involved and give input. The reflection should thus include the concerns raised by the Honourable Member.

The inclusion of the supplies of newspapers and periodicals in the list of exemptions for certain activities in the public interest in Article 132 of the VAT Directive is not conceivable at present. As already mentioned VAT as a general consumption tax should, in principle, be levied on all taxable supplies of goods and services. Any extension of the scope of exempted transactions therefore represents an obstacle to a neutral and well-functioning VAT system. Moreover, it should be noted that, in falling under this exemption, the publishers would in principle no longer have a right to deduct the VAT paid at the preceeding stage, notably on their investments, equipment and general expenses. VAT becomes in that case a cost factor and therefore a disincentive to investment and outsourcing of activities which could often more efficiently be performed by specialised providers.


OJ C 265 E, 09/09/2011
Last updated: 26 January 2011Legal notice