UK rules digital newspapers suffer 20% VAT
- Mar 18, 2018 | Richard Asquith
The UK’s First-Tier Tribunal has backed HMRC vs News Corp UK (publishers of The Times and The Sun) in making the digital versions of newspapers subject to 20% standard-rated VAT. The same printed versions are zero-rated for VAT.
News Corp attempted to argue digital newspapers fall within the UK VAT Act of zero-rated print newspapers. Also, even if not, on the basis of fiscal neutrality, they satisfy the same customer needs so should be treated equally to printed newspaper VAT to avoid market distortions.
The Court instead found digital newspapers are ‘services’ rather than printed newspaper ‘goods’. This was despite agreement that they are consumed in the same way. The judge ruled that the VAT legislation which permitted a zero rating for printed newspapers applied only to the supply of goods, and that extending the definition was not possible.
The tribunal said, “The digital editions of the titles, which constitute a supply of services, are simply not within the zero-rating provisions and the scope of those provisions cannot be enlarged by the application of a principle of interpretation, such as that of fiscal neutrality,”
Digital newspapers are suffering the same way as e-books. UK and EU legislation simply does not recognize them in the same way as their printed equivalents. This UK ruling mirrors the 2015 European Court of Justice ruling that digital books must be sold at full VAT. The EU has proposed 2022 changes to the anomaly.
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