The Icelandic Parliament has recently adopted Amending Act 1202 which provides (amongst other changes to the VAT Act) that as of 1st July 2018, supplies of sales and subscriptions of digital magazines and newspapers will be taxed at the reduced 11% VAT rate, currently enjoyed by their printed counterparts. Before this date, the standard 24% rate of VAT applies.
This action has been taken by the Icelandic government with the view that aligning the VAT rate on printed and electronic versions of magazines and newspapers, will enhance competitivity within the media industry. Further, the move is in “the spirit” of OECD guidelines, highlighting that taxation between electronic and traditional transactions should demonstrate the principles of fairness and neutrality. (The most recent attempt by the European Commission on 25th May 2018 to push through a similar proposal at EU level was once again thwarted as the Economic and Financial Affairs Council (ECOFIN) was unable to come to an agreement on this issue.)
In addition, under Act 1202 the following amendments will also come into effect:
If you believe you may be affected by these developments, please do get in touch to discuss how we can help.