The EU has agreed on a new law on VAT which comes into effect on January 1, 2015. According to this regulation, VAT on ebooks and audiobooks will be levied at the rate of the country the customer resides in. In Germany, that would be 19% for all sales of ebooks and audiobooks.
Why is this important for you as an indie author?
- If you sell ebooks on Amazon or other platforms, the new VAT law may result in an increase in your book price (right now Amazon levies only 3% VAT on ebooks and audiobooks) and/or different prices on different platforms.
- Due to the fixed book price law in Germany, you as the author and seller of an ebook have to make sure the book is sold at the same price on all platforms.
Reasons to check your prices in January
The new law could result in: – Odd prices (like 4.61 € instead of 3.99 €) – Higher prices for your book than before – Different Euro sales prices in each country – Different prices on different platforms; inadvertent violation of the German fixed book price law – Inconsistencies in royalty payments, if VAT is deducted before the royalty is calculated.
If you don’t want any of this to happen, just make sure you’re in control of the prices and check that you’ve chosen the respective tax-included price you want to sell your book at on all your distribution platforms. Don’t let prices be set by automatic conversions of list prices or exchange rates. If you do, you might inadvertently violate the German fixed book price law.
Another tip: German customers are quite accustomed to prices that end in .95 or .99, so it might be a good idea to adjust your prices accordingly.
What actions should you take?
If Amazon is the only platform you sell your books on, you can lean back and relax. Amazon will do the work for you. They’ll change their KDP system from net to gross prices, beginning January 1. They’ll automatically add the respective VAT of the country a book is sold to, using the current net price of your book as a basis.
If you sell on more than one platform, however, you should plan to check prices and adjust them accordingly in January. This is of utmost importance in order not to violate the fixed book price law in Germany. As mentioned above, VAT rates may differ on various platforms at the moment, depending on the country the distributor resides in, resulting in different gross prices.
In summary, we recommend checking whether the gross price is the same on all platforms and adjusting it as necessary.