European VAT Will Make Digital Books More Expensive, How It Will Hurt Authors, Publishers

I’ve never sold many of my Kindle books in the United Kingdom; perhaps I’ll gross $10-$17 a month. But recent changes in European tax law seem to be making it even harder to earn royalties on the website.

Here is post from Amazon on how the new VAT-inclusive pricing that kicked into effect Jan. 1, 2015 will affect readers, authors and publishers who sell e-books in countries where the company operates a Kindle Store:

On January 1, 2015, European Union (EU) tax laws regarding the taxation of digital products (including eBooks) will change: previously, Value Added Tax (VAT) was applied based on the seller’s country – as of January 1st, VAT will be applied based on the buyer’s country. As a result, starting on January 1st, KDP authors must set list prices to be inclusive of VAT.

You can read more about this on their website…

This new tax situation will effectively translate into about a 20% price hike for Kindle Book readers. In my opinion, this will hurt authors and publishers due to lost sales, and readers will have to be more choosy about the books they purchase. The VAT used to be just 3%, so the extra few pence in the UK didn’t seem to deter sales. I’m afraid that’s about to change. In December 2014, my sales of Kindle Books dropped to zero in the U.K. since this news spread across the Internet. Will this be as bad as I predicted …. or will it be worse?

Of course, the bright side of this might be that Kindle Unlimited borrowing in the UK will gain acceptance, as it allows subscribers to read as much as they can read (yes, they are limited to 10 ebooks at a time; but they can delete the ones they’ve read. It is just like checking out books from the library. You check them out, you read them, and then you take them back and check out more.)

I’ve found minor success with the Kindle Unlimited program, and I’ve renewed two of my titles through the month of February 2015 to take into account all the new Kindle e-book readers that will be given as gifts. I noticed in some of the holiday sales advertising online that 6 months of KU was being offered with some e-readers. That in itself might mean more borrow, more money, and more time for the Kindle Unlimited program to work itself out and prove it’s a long-term money-maker for authors.

Again, to get all the details about how the VAT-inclusive at Amazon.