Pressure is likely to increase on the UK Treasury to cut VAT on e-books after a controversial rate cut on the category by Luxembourg.

Luxumbourg’s decision to slash VAT rates for e-books from 15% to 3% is likely to have an impact on UK’s book trade as Amazon, which has its European operations there, can cut the cost of its ebooks reports the Financial Times.

The move will reduce an advantage which bricks-and-mortar booksellers enjoy - there is noVAT on books - and puts UK based e-book suppliers at a competitive disadvantage because VATon e-books is charged at 20% in this country.

Luxumbourg is not the only country slashing VAT on e-books; France plans to cut the rate to 7%.

David Gauke, exchequer secretary to the Treasury, told MPs earlier this month that the UK’s VAT rate on the items could not be cut.

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