Amazon is making British publishers pick up the cost of value added tax (VAT) for eBook sales to customers in Europe.
According to a report in The Guardian, while VAT tax varies from country to country, Amazon expects publishers to cover a flat 20 percent fee on all eBooks, the cost of VAT in the UK. This is much higher than in other European countries, some of which only charge consumers three percent VAT. The Guardian has more:
The section that spells out the fact that Amazon’s starting price for discount negotiations is exclusive of 20% VAT says: “Base price is the digital list price exclusive of the standard statutory rate applicable to ebooks in the United Kingdom.” This means a publisher signing up with Amazon would have to agree to a starting price of £8.33 for an ebook retailing at £10 – the digital list price – to reflect the 20% VAT any UK-based ebook retailer would have to pay.
Amazon UK explains its VAT policy to customers on its site: “Amazon.co.uk is required by law to collect VAT on orders for goods (including e-Books) dispatched to most countries within the EU. For customers with an EU delivery address, VAT is charged in accordance with local legislation.”