Michael McGrath (Cork South Central, Fianna Fail)
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63. To ask the Minister for Finance the position regarding the European VAT rules for newspapers and print media; if it is possible under the current or proposed rules to move the industry to zero rated; if it will remain the case that a country is only permitted two lower rates of VAT; and if he will make a statement on the matter. [52368/17]

Paschal Donohoe (Dublin Central, Fine Gael)
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While various proposals on VAT rates have taken place, and are due to take place, at EU level, the current EU VAT rules remain.  Each Member State must apply a standard VAT rate of 15% or more, and can apply up to two reduced VAT rates of more than 5%. Ireland applies the 23%, 13.5% and 9% VAT rates in this context.  Member States may also retain historic VAT rate treatment where such VAT rating was in place on and from 1 January 1991. Ireland’s 4.8% super-reduced rate and the zero rate, and most of the activity applying at the 13.5% rate, fit into this category.

The historical VAT rates, including the zero rate, cannot apply to new goods and services that were not charged at those rates in 1991.  As newspapers were not charged at the zero rate of VAT on 1 January 1991, it is not possible to apply the zero rate to them now.  Books were charged at the zero rate before 1991, and so they continue to avail of the zero rate.  Furthermore, EU law provides that electronically supplied books or newspapers must be charged at the standard VAT rate (23% in Ireland).

On 1 December 2016, as part of the Digital Single Market strategy and the VAT Action Plan, the Commission published four proposals that aimed to modernise VAT on e-commerce. Included in this package was a proposal to modernise and harmonise the VAT rating of books and publications so that Member States would have the power to apply any rate, including the zero rate, to books and publications supplied electronically or in physical format. This proposal was brought forward for agreement at ECOFIN on 16 June 2017, but was vetoed because of a dispute between two Member States.  The Estonian Presidency focused on the other three VAT on e-commerce proposals, which were adopted on 5 December 2017, but the e-books proposal has not been revisited since the June ECOFIN meeting.

However, the Commission is due to publish a general VAT rates proposal in January 2018.  It is expected that the proposal will aim to relax the ruling governing the application of VAT rating by EU Member States.  This comes in the light of the move to charging VAT on cross-border EU trade in the country of the consumer, where VAT rating is less of a competitive advantage.

The future VAT rating of newspaper and print media will depend on the outcome of these proposals.