Duty27™Plenty of digital sellers have a store that looks like this: a couple of e-books, a pack of Notion templates, a set of spreadsheets, maybe a course. To a payment processor it's all "digital products". To VAT law it isn't.
E-books get reduced rates. Templates don't.
Since 2018, EU countries have been allowed to apply reduced VAT rates to electronic publications: books, newspapers and periodicals supplied electronically. Most of them do. The UK went further and zero-rated e-publications from 1 May 2020.
Templates, spreadsheets, stock files, software and most other downloads are "electronically supplied services". They get the standard rate.
| Country | E-book | Template or other download |
|---|---|---|
| Germany | 7% | 19% |
| France | 5.5% | 20% |
| Italy | 4% | 22% |
| Spain | 4% | 21% |
| Netherlands | 9% | 21% |
| Ireland | 0% | 23% |
| United Kingdom | 0% | 20% |
So a checkout that applies one rate per country to every product is wrong for at least one of them. With the standard rate everywhere, your e-book buyers are overcharged. With the e-book rate everywhere, you under-collect VAT on templates and owe the difference yourself.
What counts as an e-book
The reduced rate is for publications. Roughly: something that would be a book, newspaper or magazine if it were printed.
- Usually an e-book: a novel, a guide or handbook, a workbook, a cookbook, a PDF version of a printed book.
- Usually not: templates and planners meant to be filled in or reused, spreadsheets, stock photos, presets, fonts, software.
- Excluded explicitly: publications that are wholly or mainly advertising, or mainly video or music. Both the EU rule and the UK's say so.
The edges are blurry, and countries draw them differently. A "planner" that is mostly blank pages is a template, not a book. A guide with a few worksheets at the back is still a guide. When a product is genuinely borderline, ask an accountant before picking the lower rate.
Bundles
A bundle of an e-book and templates sold for one price is a common headache. Depending on the country, a bundle may need splitting into its parts at their own rates, or may be taxed as one product. If bundles are a big part of your sales, get advice for your main markets rather than guessing.
What to do in your store
- Tag each product with its VAT category: e-book (publication) or standard.
- Make your tax calculation use the tag, per country, on the date of the sale. Reduced rates change too, and not always at the same time as the standard rate.
- Check your merchant of record's settings if you use one: whether you can mark a product as an e-book, and which rate it uses if you don't.
- Keep the reasoning for any borderline product, in case a tax authority asks later.
Duty27's API (EU countries) takes a category field (EBOOK, NEWSPAPER or PERIODICAL) and returns the right rate for that country on that date, falling back to the standard rate where no reduced rate applies. See the docs, or EU VAT rates by country.