I recently wrote (and indeed published on Amazon) a nicely interactive chess ebook (Chess Superminiatures, based around more than a hundred real-life chess games all under ten moves long). As a result, my exposure to all things ebook-related and ebook-business-model-related has spiked sharply in the last month or so.
But when it comes to VAT and ebooks, even I didn’t see this one coming.
It’s like this. The basic business model for ebook publishing is as an Agency arrangement, so if you buy a Dorling Kindersley ebook on Amazon, you’re not buying it from Amazon, you’re actually buying it from Dorling Kindersley with Amazon ‘merely’ acting as an Agent. (Yes, even though Amazon does the hosting, selling, customer transaction, billing and money collection, and then gets to sit on the money for 60 or so days before passing it on to DK.)
All the same, at this point any underlying business model differences are merely semantic as far as a customer is concerned: if you’re buying an ebook, you don’t particularly care whether it was Amazon or DK that sold it to you. You know that it ultimately came from DK, the rest is just meh.
…except if you want a VAT invoice for your purchase. Because unlike normal books, the price of ebooks (potentially) contains a VAT component (i.e. if the seller is VAT registered). Did you know that? But… how would you get a VAT invoice for an ebook?
This is the point where it gets fuzzy and legalistic.
Because it is acting as an Agency, Amazon itself doesn’t charge VAT on the sale, because the transaction is between the customer and the ultimate publisher. So whether or not there is VAT on the transaction depends on whether the ultimate publisher is VAT registered, and that is not actually made clear on the Kindle product screen.
But all the same, you would have thought that an Amazon-mediated transaction between a customer and a VAT-registered publisher would necessarily generate a dated VAT invoice of some sort, as just about every other VAT-rated transaction in the EU is required to do, right?
Wrong! Amazon sidesteps this entire issue by sneakily insisting in its Terms & Conditions that Kindle content is only ever for “personal use”. With this single stroke, they (seem to) remove the need for VAT invoices, because someone buying a book for “personal use” would not have any explicit need for a VAT invoice, because they would – as an individual – be unable to claim back VAT.
So that’s the end of that… or is it? Frankly, if I was an EU commissioner tasked with dealing with Amazon, I would be spluttering with fury into my latte every time this topic came up, because Amazon plainly sells a whole host of business-oriented content for Kindle readers, and the wave of ebook titles swells ever higher each year.
This “for personal use only” in the T’s and C’s is without any doubt nothing more than a gigantic hack: as I wrote elsewhere a few days ago, the person who first devised this trick is probably still chortling into their hand years later. In fact, it’s such an epic business model hack that I think it genuinely deserves its own Wikipedia page – give credit where credit’s due!
So, to be truthful, the line should say something like “possibly includes VAT if the ebook publisher is VAT registered (irrespective of Amazon’s own VAT accounting), not that you can claim it back because only personal use of Kindle content is allowed within Amazon’s current T&Cs”.