Last week I (like all Amazon authors) received an email from Amazon about changes in the VAT rules for e-books. This change comes into effect on January 1st 2015.
Previously (i.e. pre-Jan 2015) VAT on e-books was calculated according to the seller’s country but under the new rules, VAT rates will depend on the buyer’s country. Previously, VAT on Kindle e-books was 3% because Amazon’s headquarters (Amazon are the sellers) are in Luxembourg. Now, for UK e-book buyers it will rise to 20%.
Amazon will automatically change all list prices of existing e-books to reflect this change. This means that Kindle e-book prices are on the rise. The British government will benefit but readers of e-books will lose out.
Previously the lowest price possible on Amazon UK for an Indie e-book, with the author choosing 35% royalties, was 77p. From the 1st Jan 2015 this will rise to 99p. The lowest possible price with the author choosing 70% royalties was £1.53, this will rise to £1.99. The Amazon information page on this is here.
The moral of the story for readers? Stock up on e-books before the end of the year, or face a steep price hike! If you were planning on shopping for a Kindle or tablet in the January sales, download the free Kindle app to your PC and buy your books now to read on your new Kindle later.
The moral of the story for Indie writers? I’m not sure. We’ll have to wait and see if the new, higher prices send the customers running back to print books. Let’s hope not!
Another word of warning – if you sell e-books directly from your own website, it is your responsibility (whether you are currently VAT registered in the UK or not) to implement the new rules i.e. you must charge VAT according to the buyer’s country and then pay the VAT to the relevant government. I’ve found two interesting links on this topic Rachel Andrew has written a blog post and Juliet E. McKenna has put together another useful post.