E-learning: the reduced VAT rate also covers digital learning supplied electronically

An e-learning course on DVD attracted the 9% rate, while the same course delivered electronically attracted 21%. New policy has removed that curious difference.

Digital learning has become a fixture, certainly since the pandemic. It offers flexibility and freedom, because learners can organise the material themselves. There is also a vast range of courses and materials available, on every conceivable subject and in every conceivable form.

A training company offering e-learning courses and wanting to apply the 9% rate discovered that while digital learning had taken off, the legislation and policy on its VAT treatment had rather lagged behind.

Information on DVD or CD-ROM

An annex to the Dutch VAT Act lists the goods and services subject to the 9% rate. Alongside books it names digital educational information carried on physical media and evidently intended exclusively or almost exclusively for conveying information in education. Policy in force until recently clarified that this meant supplying physical media such as a DVD or CD-ROM.

An e-learning course on DVD is hardly of our time, particularly bearing in mind the change to the rate for e-books and audiobooks on 1 January 2020. After years of wrangling at European level, it was finally accepted that the reduced rate applies not only to printed books, magazines and newspapers but also to their digital versions.

That left the training company in a curious position: offering a course on DVD or CD-ROM allowed the 9% rate, as did a digital textbook. An e-learning course delivered electronically, however, had to be taxed at 21%.

Delivered electronically

That has since been resolved. New policy took effect on 20 April 2022 removing the difference:

Digital learning materials are increasingly offered electronically. Educational institutions purchase a licence and pupils or students are given access to the materials. This is a service supplied electronically with no physical medium involved.

For that reason the treatment is aligned with that of digital books, magazines and newspapers. The State Secretary refers to the current scope of the heading and states that the reduced rate can also apply to digital educational information supplied electronically. The condition that the information is evidently intended exclusively or almost exclusively for conveying information in education of course continues to apply.

This case shows that legislation regularly lags behind developments in society. It also shows that legislation and policy do eventually move with the times. The change certainly produced one satisfied business, able to offer its e-learning courses at a lower price.