Value-added tax on press, media and literature had always been in the lowest band of 4% until the drastic IVA reform of September 2012, when the middle level went up from 8% to 10% and the top rate from 18% to 21% – having been only 16% two years previously – and a number of goods and services which used to attract bottom-band or ‘super-reduced’ 4% IVA moved into the maximum category.
This hike from 4% to 21% has meant tougher times for parents at the start of the new school year when buying their children’s textbooks, has seen a dramatic decline in cinema and theatre audiences, CD and music download sales, and left the digital media struggling financially.
Other than educational texts, hard copies of books, newspapers and magazines still attract bottom-band IVA, but those adapted for e-readers were pushed to the top rate.
But last week, the European Commission proposed a package of tax rules aimed at giving the online market a boost.
IVA for online publications is not uniform across the EU and, to date, member States have been under no obligation to reduce it to encourage digital commerce.
Spain has decided to go one step ahead, and the IVA drop will be instant, not staged gradually, De Guindos reveals.
If the Commission’s package is approved, it will also mean companies which sell products online will be able to carry out all their IVA-related transactions via a central website in their own language, although the pages for each member State will be managed by national fiscal authorities.
Spain has still not responded to four years of pressure from the arts industry to decrease IVA on entertainment and culture back to 4% from the 21% it was raised to overnight, nor from animal-lovers in Parliament to do likewise with veterinary medication and products.