VBOOKS8515 - Determining the VAT liability when a zero rated e-publication is supplied together with another supply

When a zero rated e-publication is supplied together with another supply, it is necessary to determine whether the supplier is making a single supply or multiple supplies, in line with the principles established by the European Court of Justice in Card Protection Plan and subsequent decisions

There is a single supply where one element of the supply is the principal element to which all other elements are ancillary. An ancillary element does not constitute an aim in itself for the customer but is a means of better enjoying the principal supply.

Indicators of a single supply include:

  • a single price;
  • the supply is advertised as a package;
  • the components are not available separately;
  • the components are supplied at the same time; and
  • the customer perceives that what they are getting is a single supply.

There are multiple supplies where one or more element is distinct and independent. Indicators of more than one supply taking place include:

  • separate pricing or invoicing;
  • the items are available separately;
  • there is a time differential between parts of the supply;
  • elements of the supply are not inter-dependent or connected.

Further information can be found in VATSC11100.

The three most common outcomes if a zero rated e-publication is supplied with another supply are:

  • a single zero rated supply of e-publications (or two separate zero rated supplies);
  • a single standard rated supply to which the supply of the e-publication is ancillary; or
  • two separate supplies: one zero rated and the other standard rated.

Example 5: A business offers its customers access, by subscription, to an e-newspaper and a printed newspaper. Since the e-newspaper and printed newspaper are both zero rated, the subscription will be zero rated for VAT purposes.

Example 6: A business offers its customers access, for a subscription, to video games along with an e-magazine with commentary on those games. The main supply is the video games and the accompanying magazine is an ancillary supply as it is a better means of enjoying the games. Therefore, as video games are specifically excluded from the zero rate, there is a single standard rated supply of video games within which the supply of the magazine is subsumed.

Example 7: A business offers to sell an e-audio book and a printed book at a discounted price. Since both products are available to be purchased separately and the elements of the supplies are not interdependent, there are two separate supplies: one of a standard rated audio book and the other of a zero rated book.