Kerstin Neld’s (CEO of Sveriges Tidskrifter) article in the 2014/2015 EMMA magazine looks at the reasons why Swedish weekly Fokus doesn’t do digital. This article outlines the inequalities between the amount of VAT charged on printed magazines and the amount charged on digital magazines. The disparity between these two amounts in Sweden is a whopping 19%, with VAT on books, magazines and newspapers at 6% and VAT on digital at 25%. At Fokus,this has lead to an interesting situation whereby the digital edition of the magazine is not available as a standalone copy, but is given away free as part of the print subscription, meaning that people who do not have a print subscription are not able to access the digital magazine.

The Situation

Giving us EMMA’s expert view on the matter, Marianne Bérard-Quélin (Chair of EMMA’s VAT task force & Chairman, CEO and editor-in-chief of Société Générale de Presse) outlines the issue and the reasoning behind this disparity in VAT rates between print and digital.

Giving Member States the option to lower VAT rates for printed press appears to be generally motivated by a desire to keep citizens informed and to encourage democratic participation. Indeed, Neld notes that in 2002 the Swedish government lowered the VAT rate on print magazines to 6% in order to encourage more people to read books, to follow the news, and to participate in key debates.

New Challenges

It is unwise, however, to disregard the undeniable trend in media consumption towards online media and online readership. Neld states that to ignore this trend and to fail to adjust VAT policy to match this shift runs the risk of reversing the positive effects that VAT reduction has had thus far.

At the end of 2012, former European Commissioner for the Digital Agenda Neelie Kroes worte an op-ed in Sweden’s largest daily newspaper Dagens Nyheter, calling on the Swedish government “to contribute to a wider recognition among the other member states of the importance of IT and digitisation.” For Neld, this call has gone unanswered and will remain so as long as issues such as the disparity in VAT rates between print and digital remain unresolved.

The Best Solution

According to Neld, in order to retain the same levels of citizen participation it is vital to ensure that a harmonization of VAT rates for print and digital doesn’t result in the loss of reduced VAT rates altogether. This would have disastrous effect on publishers, leading to a drop in sales, followed by a considerable drop in quality and ultimately resulting in reduced democratic participation across Europe. Neld darkly muses about a world where ‘Why we don’t do digital’ has become ‘Why we don’t do journalism’.

Putting this out of her head, she salutes the steps already taken by France and Luxembourg in defiance of the EU VAT regulations. While Neld doesn’t go as far as asking the Swedish government to follow their lead, she hopes that the actions of the French and Luxemburgish governments will motivate the European Commission to re-examine the issue.

“…if Member States are allowed to apply reduced VAT rates on digital as well as printed publications – journalism in Europe can look forward to a bright future.”