February 7, 2018

Commission’s proposals on VAT is an excellent supportive measure to realise circular economy’s goals and benefits

FEAD members consider the VAT rates as a useful instrument to pursue EU’s political, economic and environmental objectives, therefore the private waste and resource management industry welcomes the newly proposed rules1 by the European Commission to give Member States more flexibility to set Value Added Tax (VAT).

Whereas the European Commission is continuing to explore several routes to boost the demand of recyclates, FEAD strongly believes that fiscal incentives to this regard should also be considered, such as lower or zero VAT rates on products with recycled content.

The new proposals on VAT will enable Member States to put in place, upon national choice, reduced or zero VAT rates for their selected categories of products. FEAD advocates such a choice to be left to MS, allowing products with recycled content to be possibly selected amongst those benefiting from reduced VAT rates.

Now it will be up to the Council acting unanimously to give the green light to the Commission’s proposals, with the perspective that reduced VAT on targeted products or services can be in the future an excellent supportive measure to help realising circular economy’s goals and benefits, by promoting sustainable products and raising consumers’ awareness.

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1 Proposal on amending Directive 2006/112/EC as regards rates of value-added tax: